You would start by creating a page that will act as your IPN page.
Then you would update your paypal profile from your paypal site and tell it the location of that IPN page.
Then you can add the functionality you need to the IPN page. The first thing you would do is apply the server behavior eCart->add to cart->add to cart from form, and choose "paypal ipn" as the form type.
Read this forum for more information from others going through the same process. I have walked several people through it successfully in the past.