My wife had a cheap old dagger that hasn't seen any use in years and years, so I decided to recycle it. The tang of the blade is threaded on the end, so all I had to do was unscrew the plate at the end and the whole hilt came right off. I built a new hilt and sheath out of some hardwood scrap. The blade is certainly not anything exciting as far as quality, but it's good enough for an accessory.
The hilt is made from two pieces of wood glued together. The sheath is made of three pieces, two solid sides and a thin section in the center with a space cut out for the blade. All of this was glued together and then cut and sanded to shape. I'm still not entirely happy with the shape of the hilt, but I'm not really much of a woodworker. The fit of the blade in the sheath started out quite snug, but loosened up after a while. I tried a variety of methods to improve the fit, but ended up just putting a little duct tape on the inside of the sheath, which did the trick.