In the project's Milestones tab, click the New Milestone button and a pop-up will appear. In the pop-up, enter in a name for the milestone, a start date and end date. The start date cannot be earlier than the project start date. The tool also will not allow a start date to be later than the end date. Click Create when ready, and the milestone details window will appear.
Any active user who is a project member can create a milestone. However when updating the milestone owner, a user may be able to choose from a list of all project members of just a subset depending on their project permission settings.