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Project Runway uses progressive elimination to reduce the initial field of 12 or more fashion designers down to 3 or 4 before the final challenge. Each non-finale challenge (the scope of one episode) requires the designers to develop one more new garment to be presented at a runway show. The challenges include to creating a garment from non-traditional materials, such as recycled materials (Season 3) or items from a grocery store (Season 1 and 5),or using the 'clothes off their backs' (Season 2), or designing for a certain person (such as figure skater Sasha Cohen or Miss USA Tara Conner), corporate fashion line (Banana Republic or Macy's INC), or specialized theme (such as a "cocktail party"). The designers are given a stipend and limited amount of time to finish each garment (from as short as half a day to two or three days). Often the designers work independently, although on some challenges contestants must work in teams. Once the deadline is reached, the designers must dress their models and select their hair, make-up, and accessories. Each model walks down the runway, and the garment the contestant made is rated by a panel of judges, scoring each dress in a number of categories from 0 to 5. The judges then interview the designers and share their opinions before conferring as a group and selecting winning and losing designers based on their scores and other considerations. Generally, the loser of each challenge is eliminated from the competition, with host supermodel Heidi Klum wishing him or her "Auf Wiedersehen" before they depart; thus elimination from the show is sometimes called "being auf'd".

After the final challenge, the remaining three or four designers are then told to prepare a complete fashion collection to be presented at New York Fashion Week at Bryant Park. The finalists are given 12 weeks and $8000 for this task which they perform at their own homes or studios; while some construction work can be outsourced, the majority of the garments must be created by the designers themselves. Prior to the show, the finalists return to New York City to perform final fitting on their models, and also may be thrown an additional challenge, such as designing an additional outfit to fit the collection. The ultimate winner is selected by the judges, and receives $100,000 to start his or her own design line, a magazine spread in ELLE Magazine, and a mentorship from a design firm; later seasons have also included a new car as part of the prize package.

Fashion models who work with the designers throughout the season are also in the competition. Each week, as the number of designers dwindles, the number of models is also reduced, with one model remaining at the end. Models may sometimes be randomly pre-assigned to a designer; in other cases, designers will have an opportunity to pick the model they wish to work with, the winner of the previous challenge receiving first pick and subsequent designers picking through a random draw. Included in the prize package for the winning model is coverage in the American edition of ELLE magazine, featuring the winning designer's designs as part of her prize.

Joining Klum in judging duties include American designer Michael Kors, ELLE magazine editor-at-large Nina Garcia, and a fourth judge - typically a fashion designer (e.g. Diane von Furstenberg, Vera Wang), critic (Teri Agins of the Wall Street Journal) or model (e.g. Iman), a celebrity (Victoria Beckham, Sarah Jessica Parker) , or a professional from an industry related to the challenge (Sasha Cohen). Tim Gunn, Chief Creative Officer for Liz Claiborne Inc, acts as mentor to the designers and does not participate in the judging; instead, he will visit the designers midway through each challenge to comment and suggest improvements for each design. The show takes place in New York City (with a short stop in Paris in Season 3) with designers using a workroom at Parsons The New School for Design, shopping for materials at a fabrics store in New York's Garment District (usually Mood Designer Fabrics on W. 37th Street unless the challenge calls for an unusual material or the fabric is provided, as in the Banana Republic challenge from Seasons 1&2), and living together at Atlas New York (an apartment building near Parsons) during seasons 1-3 and New Gotham during season 4. While on the show, the designers are prohibited from leaving the apartments without authorization, making unauthorized communication with family or friends, or using the Internet to research designs. Designers are also forbidden to bring pattern books or similar how-to books with them during the show.

Season 1: Jay McCarroll

Season 2: Chloe Dao

Season 3: Jeffrey Sebelia

Season 4: Christian Siriano

Season 5: Leanne Marshall

Season 6: Irina Shabeyeva