How to create a local yum repository in CentOS

Create a CentOS mirror for your local network

First create the directories (you have to replace the 4 and i386 to match your major version and architecture):

mkdir -pv /var/www/html/centos/5/{os,updates}/i386

then,
mkdir -pv /var/www/html/centos/5/os/i386/CentOS/RPMS/
and copy the CD/DVD rpms here.

Creating the base repository headers:
createrepo /var/www/html/centos/5/os/i386/

If you don't have createrepo installed, you can download and install it by typing: yum install createrepo

Updating the repository:
First, select an rsync mirror for the updates from CentOS Mirror List

For example: rsync://mi.mirror.garr.it/CentOS/

Then create the updates-released repo by running rsync:
rsync -avrt rsync://mi.mirror.garr.it/CentOS/5.3/updates/i386 --exclude=debug/ /var/www/html/centos/5/updates/

The update repository will be created in /var/www/html/centos/5/updates

Yum configuration:
Simply edit /etc/yum.repos.d/CentOS-Base.repo and replace your current configuration with this one below:

[base]
name=CentOS-$releasever - Base
baseurl=http://192.168.*.*/centos/$releasever/os/$basearch/
#mirrorlist=http://192.168.*.*/centos/?release=$releasever&arch=$basearch&repo=os
#baseurl=http://mirror.centos.org/centos/$releasever/os/$basearch/
gpgcheck=1
gpgkey=http://mirror.centos.org/centos/RPM-GPG-KEY-CentOS-5
#released updates
[update]
name=CentOS-$releasever - Updates
baseurl=http://192.168.*.*/centos/$releasever/updates/$basearch/
#mirrorlist=http://mirrorlist.centos.org/?release=$releasever&arch=$basearch&repo=updates
#baseurl=http://mirror.centos.org/centos/$releasever/updates/$basearch/
gpgcheck=1
gpgkey=http://mirror.centos.org/centos/RPM-GPG-KEY-CentOS-5

I hope it was helpful !