First of all you need to log in to the Magento administrator area. Then go to System -> Magento Connect -> Magento Connect Manager.
A new page will open for the Magento Connect Manager and you will be asked to login with your administrative login again. You should use the same login credentials as for your Magento administrator area.
Once logged in you will see 2 sections: Extensions and Settings. It is recommended to verify the options chosen in the Settings section first.
In the Settings section there are 2 options you can choose from a drop down menu: Beta and Stable. For standard usage the Stable option is recommended.
Setting it to Beta gives you the possibility to check on Beta extensions. This is generally not recommended as Beta extensions might have bugs and could disrupt the functionality of your online store.
It is of utter importance to create a backup before downloading extensions or extension upgrades. You can check this part of the tutorial for more information how to create a backup. Thus if an issue occurs after downloading and installing an extension you can revert the changes by restoring a working backup.
Once you have performed the backup you can access Magento Connect Manager -> Extensions tab. Click the link to Magento Connect.
This will open a new window for Magento Connect and let you browse the available extensions. There is a search functionality included and modules are separated in different categories.
There are various extensions. Some are free and others are paid. In each case the download from Magento Connect requires registration in order to get the extension key. Instructions may vary depending on the specific extension, but you will always be prompted to do the needful for the download.
Once you have chosen an extension click the Get extension key button.
A prompt will pop up asking you to agree to the licence agreement, then click again the Get Extension Key button.
At this point you will be provided with the Extension key:
This is the key that you need to copy and paste in your Magento Connect area. Then click install.
The new extension will be automatically downloaded and installed for your Magento online store. Note that any errors will be marked in blue. Generally if this occurs there will be information about the problem and instructions how to rectify it. After the extension is properly installed a screen for a successful install will appear:
Once the extension is installed it is important to go back to Magento admin and adjust its options according to your needs. Also make sure that your online store is properly functioning and there are no errors.
How to upgrade an existing Magento Extension
In order to check for upgrades for the Magento extensions you use follow the instructions below.
Login to the Magento admin area -> System -> Magento Connect -> Magento Connect Manager. On the Extensions Tab click on Check for Upgrades.
The Magento Connect manager will automatically connect to the server and check for available upgrades. If you have an extension that has a published upgrade they will be colored in yellow and you will be able to apply the upgrade to your Magento module. Note that it is again extremely important to backup your Magento online store before applying the upgrade. From the drop down menu you will be able to select the desired upgrade. Then click Commit Changes. The chosen upgrade will be automatically downloaded and applied.
Once the extension is upgraded you can refresh the page via the Refresh button. Then check the current status of your extension. You will find the yellow colour is removed for your Upgraded Extension and the Installed column will be changed to the version number you just installed.
You can now click Return to Admin and check if any new Configuration Settings for your Extension are available. Also make sure that your online store is properly functioning and there are no errors.