Creating Repeating Pattern Swatches

Make a new document.

Make a square of equal height and width.

This will be your guide square for the repeating pattern. The main body of the pattern should lie inside the square and overlapping the square will be repeated elements.

In the layers palette you will need to temporarily lock this layer.

Make a new layer, this will be the layer you will draw your pattern on.

When you draw your pattern elements think of how they will repeat from left to right and top to bottom.

Where the elements cross over the edges of the square this is where they will be repeated.

Start by concentrating on all the elements on the left that overlap the edge of the square. These will need to be copied over to the right. In this example the red star and one of the blue rectangles.

Click on one of the elements and select Object > Transform > Move...

You will be moving the element Horizontally the same width of the guide square, 200 mm in this case. If you select Preview you will be able to see where it will be moving to. Click Copy to make a copy of the element. Repeat with any other shapes crossing the left side of the guide square. Tip: you can quickly repeat the last transformation by pressing Cmd and D.

To move elements from right to left type -200mm

You can now concentrate on the elements to move from top to bottom. To do this you will need to type 200mm Vertical and click Copy. Again any elements to move from bottom to top will need to move -200mm

You should end up with an arrangement of elements overlapping the guide square repeating left to right and top to bottom.

You will now need to unlock the guide layer and select the square guide. You can do this all from the Layers palette.

Remove all of the guide square fill and stroke colour and ensure that this object is the back most object by selecting Object>Arrange>Send to Back.

Select all of the elements including the guide square and drag them into the Swatches palette.

You will see a new thumbnail appear here that you can now apply to any shape as a fill pattern.

Test your new pattern. If you need to make any changes you can edit the original and add it again.

Here is a much more in-depth tutorial on patterns from Digit Mag

and here is the The Adobe manual explanation of patterns.