Start by creating a circle using elliptical shape tool.
Press Ctrl+T. Right click the layer and select warp. Adjust nodes to get the shape as shown.
Create a circle using elliptical shape tool and place it for the eye.
On top of it create two more smaller circles to create the eye ball.
Duplicate the eye and place it on the other side. Scale it down.
Using pen tool create a shape like shown in the image.
Create a circle using elliptical shape tool. Move this layer below the previous layer in the layer palette.
Create another rounded rectangle using rounded rectangle shape tool. Fill it with a different color. Place it for the nose.
Double click the layer to open layer style window. Apply layer style with the settings shown.
Similarly apply stroke on the other parts.
Create a rounded rectangle using rounded rectangle shape tool.
Press Ctrl+T. Right click the layer and select warp. Adjust nodes to get the shape as shown.
Place it for the ear. Apply stroke.
Duplicate, flip horizontal and place it for the other ear.
Create a rounded rectangle using rounded rectangle shape tool. Press Ctrl+T. Right click the layer and select warp. Adjust nodes to get the shape as shown. This will serve as the lower body of the dog.
Enable add to shape area from top bar and using pen tool create leg shape.
Duplicate the leg path. Press Ctrl+T. Right click the layer and select flip horizontal.
Using pen tool create a shape to show rear leg.
Apply stroke on all parts.
Create a rounded rectangle using rounded rectangle shape tool. Place it for the tail.
Apply stroke. Press Ctrl+T. Right click the layer and select warp. Adjust nodes to get a tail shape as shown.
Create an ellipse using elliptical shape tool. Place it for the neck band. Move the layer in layer palette so that it's below the face and above the body in layer order.
Create a circle over the band using elliptical shape tool.
Create an ellipse using elliptical shape tool.
Using pen tool create paths to separate out legs form the body.
Select a 3 pixels solid brush. Create a new layer. From path window click on stroke path with brush.
Apply a nice gradient to the background.
