“And (remember) when your Lord proclaimed: “If you give thanks (by accepting Faith and worshiping none but Allah), I will give you more (of My Blessings), but if you are thankless (i.e. disbelievers), verily! My Punishment is indeed severe.” [Quran 14:7]

Probably the best way to thank Allah is to be aware of His presence and His power at all times and in all places and to keep in mind all the favors He has granted to us whether these favors are seen or unseen.

A good way to make Allah’s favors dearer to us is look at those who are lacking them. When we see the patient in the sickbed, we realize Allah’s favor in giving us good health. We should exploit our good health in obeying Allah by pushing ourselves to perform prayers, fasts, Hajj, and good deeds like enjoining on others what is right and forbidding what is wrong.

When we witness the difficulties suffered by those who are blind and the deaf, we come to know how blessed we are by having full use of our senses. All of these favors encourage us to thank Allah and use the blessings that He has given us in obedience to Him and not in disobedience.

Allah reveals this in a verse in the Qur’an:
If you tried to number Allah’s blessings, you could never count them. Allah is Ever-Forgiving, Most Merciful. (Surat an-Nahl, 18)

Allah loves it when believers say thanks to Him
“Therefore remember Me, I will remember you. Give thanks to Me, and reject not Me.” [Quran 2:152]
He [Allah] said, ‘Moses, I have chosen you over all mankind for My Message and My Word. Take what I have given you and be among the thankful.’ [Surat al-A’raf, 144]

If a believer thanks Allah and remain content on what He has provided for him, He will surely increase His Mercy, Provision and Blessings on him. In the Qur’an Allah also reveals, in these words of satan’s, that one of his main aims is to prevent people giving thanks:

“Then I will come at them, from in front of them and behind them, from their right and from their left. You will not find most of them thankful.” [Surat al-A’raf, 17]

Satan wishes to prevent people from giving thanks because the importance of giving thanks is set out in a great many verses. Of course, one of his principal objectives will be to cause people to ignore such an important truth.

People directed by Satan are in any case not inclined to give thanks. Most of these people only remember such a basic religious obligation as giving thanks for a very short after having been troubled by an affliction or unwelcome situation of some kind, after which they return to their lives of idolatry. In the Qur’an, Allah reveals the situation of people who pray when struck by affliction but then return to ascribing equals to Him when their troubles are eased as an example of this:

Say: ‘Who rescues you from the darkness of the land and sea? You call on Him humbly and secretly: “If you rescue us from this, we will truly be among the thankful.”’
Say: ‘Allah rescues you from it, and from every plight. Then you associate others with Him.’
[Surat al-An’am, 63-64]

Prophet Muhammad PBUH use to prostrate to thanks Allah
“When anything came to the Prophet which caused pleasure (or, by which he was made glad), he prostrated himself in gratitude to Allah.”
[Sunan Abu Dawud Book 14, Hadith 2768]

It was narrated from Mu’aadh ibn Jabal that the Messenger of Allah (blessings and peace of Allah be upon him) took his hand and said: “O Mu’aadh, by Allah I love you, by Allah I love you.” Then he said, “I advise you, O Mu’aadh, do not fail following every prayer to say: O Allah help me to remember You, thank You and worship You properly.”
Narrated by Abu Dawood and al-Nasaa’i.

How can a person thank his Lord for His great blessings?
His gratitude should fulfill all the necessary conditions, which are gratitude of the heart, gratitude of the tongue and gratitude of the physical faculties.

Ibn al-Qayyim (may Allah have mercy on him) said:
Gratitude may be in the heart, in submission and humility; on the tongue, in praise and acknowledgement; and in the physical faculties, by means of obedience and submission.

1- Gratitude of the heart: what is meant is that the heart senses the value of the blessings that Allah has bestowed upon His slave, and fully acknowledges that the one who has bestowed these great blessings is Allah alone, with no partner or associate. Allah says (interpretation of the meaning):

“And whatever of blessings and good things you have, it is from Allah”[16:53]. 
2- As for gratitude of the tongue, it means acknowledging verbally – after believing in the heart- that the One Who grants blessing is indeed Allah, and keeping the tongue busy with praise of Allah, may He be glorified and exalted.

3- Gratitude of the physical faculties means using one’s physical faculties in obedience of Allah and keeping them from committing sins and acts of disobedience that Allah has forbidden.
Allah says (interpretation of the meaning):

“Work you, O family of Dawood (David), with thanks!” [34:13]

It was narrated that ‘Aishah said: When the Messenger of Allah (blessings and peace of Allah be upon him) prayed, he would stand for so long that his feet became swollen. ‘Aishah said: O Messenger of Allah, are you doing this when Allah has forgiven your past and future sins? He said: “O ‘Aishah, should I not be a thankful slave?”
Narrated by al-Bukhari and Muslim.