First you must become a Werewolf by joining the companions at Jorrvaskr in Whiterun.

Next you need to travel to Falkreath and talk to a man in the jail cells. He will give you the (cursed) ring.

Then you have to kill a beast in the forest and Hircine will appear before you.

You will be given a choice to either kill the other Werewolf or to help him.

If you kill him you get armor. If you don't, you get the uncursed Ring of Hircine which allows you to become a werewolf whenever you want.