Introduction
This guide is intended to provide you with simple instructions on how to install Nagios from source (code) on Ubuntu and have it monitoring your local machine inside of 20 minutes. No advanced installation options are discussed here - just the basics that will work for 95% of users who want to get started.
These instructions were written based on an Ubuntu 6.10 (desktop) installation. They should work for an Ubuntu 7.10 install as well.
What You’ll End Up With If you follow these instructions, here’s what you’ll end up with:
Nagios and the plugins will be installed underneath /usr/local/nagios
Nagios will be configured to monitor a few aspects of your local system (CPU load, disk usage, etc.)
The Nagios web interface will be accessible at http://localhost/nagios/

Required Packages
Make sure you’ve installed the following packages on your Ubuntu installation before continuing.
Apache 2
PHP
GCC compiler and development libraries
GD development libraries
You can use apt-get to install these packages by running the following commands:
sudo apt-get install apache2
sudo apt-get install libapache2-mod-php5
sudo apt-get install build-essential

With Ubuntu 6.10, install the gd2 library with this command:
sudo apt-get install libgd2-dev

With Ubuntu 7.10, the gd2 library name has changed, so you’ll need to use the following:
sudo apt-get install libgd2-xpm-dev

1) Create Account Information
Become the root user.
sudo -s

Create a new nagios user account and give it a password.
/usr/sbin/useradd -m -s /bin/bash nagios
passwd nagios

On older Ubuntu server editions (6.01 and earlier), you will need to also add a nagios group (it’s not created by default). You should be able to skip this step on desktop, or newer server editions of Ubuntu.
/usr/sbin/groupadd nagios
/usr/sbin/usermod -G nagios nagios

Create a new nagcmd group for allowing external commands to be submitted through the web interface.
Add both the nagios user and the apache user to the group.
/usr/sbin/groupadd nagcmd
/usr/sbin/usermod -a -G nagcmd nagios
/usr/sbin/usermod -a -G nagcmd www-data

2) Download Nagios and the Plugins
Create a directory for storing the downloads.
mkdir ~/downloads
cd ~/downloads

Download the source code tarballs of both Nagios and the Nagios plugins (visit http://www.nagios.org/download/ for links to the latest versions). These directions were tested with Nagios 3.1.1 and Nagios Plugins 1.4.11.
wget http://prdownloads.sourceforge.net/sourceforge/nagios/nagios-3.2.3.tar.gz
wget http://prdownloads.sourceforge.net/sourceforge/nagiosplug/nagios-plugins-1.4.11.tar.gz

3) Compile and Install Nagios
Extract the Nagios source code tarball.
cd ~/downloads
tar xzf nagios-3.2.3.tar.gz
cd nagios-3.2.3

Run the Nagios configure script, passing the name of the group you created earlier like so:
./configure --with-command-group=nagcmd

Compile the Nagios source code.
make all
Install binaries, init script, sample config files and set permissions on the external command directory.
make install
make install-init
make install-config
make install-commandmode
Don’t start Nagios yet - there’s still more that needs to be done...

4) Customize Configuration
Sample configuration files have now been installed in the /usr/local/nagios/etc directory. These sample files should work fine for getting started with Nagios. You’ll need to make just one change before you proceed...
Edit the /usr/local/nagios/etc/objects/contacts.cfg config file with your favorite editor and change the email address associated with the nagiosadmin contact definition to the address you’d like to use for receiving alerts.
vi /usr/local/nagios/etc/objects/contacts.cfg

5) Configure the Web Interface
Install the Nagios web config file in the Apache conf.d directory.
make install-webconf

Create a nagiosadmin account for logging into the Nagios web interface. Remember the password you assign to this account - you’ll need it later.
htpasswd -c /usr/local/nagios/etc/htpasswd.users nagiosadmin

Restart Apache to make the new settings take effect.
/etc/init.d/apache2 reload

Note: Consider implementing the ehanced CGI security measures described here to ensure that your web authentication credentials are not compromised.

6) Compile and Install the Nagios Plugins
Extract the Nagios plugins source code tarball.
cd ~/downloads
tar xzf nagios-plugins-1.4.11.tar.gz
cd nagios-plugins-1.4.11

Compile and install the plugins.
./configure --with-nagios-user=nagios --with-nagios-group=nagios
make
make install

7) Start Nagios
Configure Nagios to automatically start when the system boots.
ln -s /etc/init.d/nagios /etc/rcS.d/S99nagios

Verify the sample Nagios configuration files.
/usr/local/nagios/bin/nagios -v /usr/local/nagios/etc/nagios.cfg

If there are no errors, start Nagios.
/etc/init.d/nagios start

8) Login to the Web Interface
You should now be able to access the Nagios web interface at the URL below. You’ll be prompted for the username (nagiosadmin) and password you specified earlier.
http://localhost/nagios/

Click on the "Service Detail" navbar link to see details of what’s being monitored on your local machine.
It will take a few minutes for Nagios to check all the services associated with your machine, as the checks are spread out over time.

9) Other Modifications
If you want to receive email notifications for Nagios alerts, you need to install the mailx (Postfix) package.
sudo apt-get install mailx
sudo apt-get install postfix

You’ll have to edit the Nagios email notification commands found in /usr/local/nagios/etc/objects/commands.cfg and change any ’/bin/mail’ references to ’/usr/bin/mail’. Once you do that you’ll need to restart Nagios to make the  configuration changes live.