A friend sent me this useful article. Unfortunately no pictures. This method would also apply to rabbits.
First off, I recommend that all of your squirrels be head shot. That way the heart, kidneys, and liver can be harvested for consumption more easily. If you gut shoot your squirrel you will have punctured the guts, and therefore contaminated more of the meat. It is also of importance to check the color of the liver. The liver should be very dark red almost a maroon color, with no discoloration. If the liver is spotted or pale in color, this is a very good indication the animal is sick, and therefore the meat questionable. This is also true of deer and most game animals.
Tools needed: Skinning knife, or just a good sharp pocket knife.
Step one: Lay the squirrel out on its belly, and with your fingers pinch up the skin in the middle of the animals back. Take your knife and make about a one inch cut. Try not to cut into the meat.
Step two: Insert your fingers into the opening you just made with your knife, and pull the skin in opposite directions. Do this until the skin rips all the way around the width of the body. You may have to use your fingers from time to time, in order to help the skin come free of the meat. Now you should be left with the skin divided into two sections, the upper and the lower.
Step three: From here on out the squirrel will be laying on its back. Pull the upper portion of the skin up over the shoulders, then pull the arms out of the skin. It’s just like pulling off a shirt. Pull the skin up to the neck, and cut off the head. Cut the hands off at the wrist, and take special note of the tufts of hair still located near the wrist. It’s been said that these tufts of hair are scent glands, and if left on can make the meat have a bad taste. Cut off the tufts of hair.
Step four: Pull the lower portion of the skin down to the ankles. Pull the skin just past the ankle bone and carefully cut off the feet. Pull the skin the rest of the way off the tail.
Step five: Take your knife and just above one of the back legs, (where the leg meets the body) split the pelvic bone and break it open. This will cause an opening just above where the tail is.
Step six: Very carefully take your knife and slowly split the squirrel up the full length of its body. Take the incision all the way up the body and out the neck. Be very careful not to cut the guts, or the meat will either be completely ruined or taste bad. If you do and get some nastiness on the meat, quickly rinse the meat with water. If you are careful and take your time when cutting, you will avoid cutting open the guts.
Step seven: Make an incision on the outside of the pelvic bone (where the back leg meets the body). This will open up the tail area a little more, allowing you to get to all of the tail. Cut the tail off.
Step eight: Take your hands and reach inside the incision you made along the belly. Start in the chest cavity and pull out the larynx, lungs, heart, and on down to the diaphragm, pull guts and all out. It all comes out clean in one pull. You are now left with a nice clean piece of meat.
Step nine: Carefully cut off the arms behind the shoulder blade. Take your knife and cut the back legs off as well. Cut them along the pelvic bone. All you have to do here is slice the meat all the way around the leg so it loosens up a little, then just twist the leg off.
Step ten: Cut the squirrel into two halves. Make your cut right where the ribs end. The rib section wont have much meat on it, but if put into a stew, the meat that is there will fall right off the bone and tastes really good. Take the other section of the body along with all of the legs, fry or bake and season to taste.
How to get rid of the “gamy” taste: If you don’t like a gamy taste to your meat you can place the meat in a container, add one tablespoon of salt, fill with water. Let this sit refrigerated over night to help reduce the gaminess of the meat. Seasoning the meat further while it cooks will remove even more of the gamy taste.