Back on the Networking page we covered the basics of the "what", "where", and "why" of a proxy server, and the reason NAT ("masquerading" in Linux-ese) is needed, as well as how to configure the Linux networking files to get your system operational on a network. This page will show you how to turn your networked system into a proxy server.
Recall also from the Networking page that a proxy server is a "dual-homed" system. In other words, it needs two network interfaces. The "internal" interface (a NIC card) connects to the internal LAN and the "external" interface connects to the outside network (typically the Internet). The external interface can be a NIC card which connects to a cable or DSL modem, or you can simply use a dial-up modem as your external interface. (We showed you how to get a dial-up modem working back on the Modems page.) The script below will work in either instance.