First train your dog to sit and while the dog is sitting move the treat down to floor right under the dogs nose. The dog should lie down to retrieve the treat.

Speak the command, "Down" or "Lie down" as the dog lays down and, as with any other command, be sure to give verbal praise in a good-natured voice.

Many dogs are better with hand signals at first than verbal commands, so it also helps to make a downward motion, palm down, when you give the command. After awhile, the dog will respond with either the verbal or the physical command. And your dog looks really smart if it lays down with just a simple hand motion.