How do I use a different drive as an installation location for Steam?

Some points not addressed in the above answers:

• While Steam lets you create multiple libraries, it appears some games can only be installed in the primary library. I suspect this applies to games (eg, those using the Source engine like TF2) with shared content.

• Using a symlink to move the SteamApps library folder out of the Steam directory causes problems, since some games appear for whatever reason not to follow symlinks. Certainly this TF2 bug is related, but others may also be. (It appears you can do this successfully using a bind mount, but this is unnecessary - see below).

However, to answer the original question - you can just move the Steam folder entirely to a new location (eg, to move it to /opt/Steam):

sudo mv ~/.local/share/Steam /opt

Once it is moved, attempt to start Steam (using the Unity icon or /usr/bin/steam). You will get a message:

Couldn't find Steam content, did you move it?

Which will let you select the new Steam directory. Subsequently it will start normally.

• This worked moving Steam to another ext4 filesystem. I do not know whether this will work if you change the permissions or attempt to use a non-linux filesystem.

• I have not tried sharing a library directory between Windows and Linux steam. I suspect this would end badly.

• Moving the Steam directory will usually make SteamGuard require an unlock code the next time you start Steam.

Apparently it gives you the option when downloading a game.

I have not tried this myself but I don't see any reason it wouldn't be straight forward. But reportedly it only works for games that uses the new content system.

Steam lets you define what they call "Steam Library Folders". In the steam client go to the "Steam" menu item, and select "Settings", the go Downloads+Cloud tab:

Click on "Steam Library Folders" and adjust accordingly:

To move a game's installation files from one folder to another, go to "Library", find the game, right-click on it, select "Properties", click the "Local files" tab, and click "Move install folder...".