Teaching your dog to drop is a useful start to lots of other training. Even when you are playing tug with your dog it is good to be able to get him to stop when you want him to.
step 1: Get your dog used to the drop command
Sprinkle some treats or some kibble on the ground at the same time as you say drop
STep 2: at this stage he has nothing in his mouth
Right now, you are simply getting him to associate food with the word "drop"
step 3: use your hand to point out the food on the floor.
This is a useful step because it gets the dog used to your hand coming down as you say "drop"
step 4: make sure you are doing things in the right order
Say the word drop just before you put the food on the floor
step 5: Al.so practice this while sitting down
Practising while sitting down starts to get the dog used to acting in the same way in other situations
STEP 6: PRACTISE IN A NUMBER OF DIFFERENT SITUATIONS
The more varied the situations in which you repeat the procedure the better.
step 7: Also vary THE POSITIONS FROM WHICH YOU GIVE THE CUE
The more varied the number of positions and different situations you give the cue from the better the dog will learn the behavior
STEP 8: ALSO PRACTICE WHILE YOUR DOG IS LYING ON ITS BED.
As mentioned before you should practice in as many different situations as you can. If you have built a solid foundation with your dog you should notice that as soon as you say drop they start to orient towards the floor. They should do this before you have even dropped the treat. This tells you that you are ready to on to the next step
step 9: Start to train around an object
Start with an object which the dog is not too excited about . Say "drop" and drop the treat as soon as he looks at it.
STEP 10: NEXT MOVE ON TO A TOY
Start with a toy which your dog is not too interested in. He should leave the toy and look for his treat as soon as you say "drop". Move on to more and more difficult toys. Still drop the food a second after you say the word "drop" regardless of the dog's behavior. This will develop a strong association between your dog hearing the word "drop" and letting the object drop from his mouth regardless of how exciting it is.
step 11: keep practising
Keep practising making the situation more and more difficult. A squeaky rubber toy is useful at this stage. Dogs find them irresistible.
step 12: the same thing applies to tug toys
Your dog should stop tugging on the toy when you say "stop"
Here is the full training video: