Before you can actually strip electrical wires, you'll need one of two tools to remove the insulation from the copper wire. The first tool is a wire stripping tool. It has cutoff blades and many formed stripping holes (notches) on each half of the tool. These holes have the different sized wires listed for you. For instance, if you're stripping #12 wire, you'll use the #12 hole. It will cut the insulation off of the wire without damaging the copper wire.
A combination tool is the other option for stripping the wires. It also is a wire-stripping tool, but it also has a wire terminal crimper. This allows you to crimp terminals on the ends of the wire when making that type of connection.
Tools Not Recommended
Although a knife or linesman pliers would also strip the wires, they also may damage the copper wire by nicking the copper or cutting into it. Nicked wires can lead to overheating of wires and eventually could cause an electrical fire in your home.
How to Strip the Wires
By simply squeezing the handles about 3/4" from the end of the wire and then twisting it slightly the insulation will be cut free. Then by pulling the wire strippers towards the end of the wire, the insulation should slide right off of the copper wire.