How do I install a NuGet package .nupkg file locally?

Menu Tools → Options → Package Manager

Give a name and folder location. Click OK. Drop your NuGet package files in that folder.

Go to your Project in Solution Explorer, right click and select "Manage NuGet Packages". Select your new package source.

Here is the documentation.

For .nupkg files I like to use:

Install-Package C:\Path\To\Some\File.nupkg

You can also use the Package Manager Console and invoke the Install-Package cmdlet by specifying the path to the directory that contains the package file in the -Source parameter:

Install-Package SomePackage -Source C:\PathToThePackageDir\

For Visual Studio 2017 and its new .csproj format

You can no longer just use Install-Package to point to a local file. (That's likely because the PackageReference element doesn't support file paths; it only allows you to specify the package's Id.)

You first have to tell Visual Studio about the location of your package, and then you can add it to a project. What most people do is go into the NuGet Package Manager and add the local folder as a source (menu Tools → Options → NuGet Package Manager → Package Sources). But that means your dependency's location isn't committed (to version-control) with the rest of your codebase.

Local NuGet packages using a relative path

This will add a package source that only applies to a specific solution, and you can use relative paths.

You need to create a nuget.config file in the same directory as your .sln file. Configure the file with the package source(s) you want. When you next open the solution in Visual Studio 2017, any .nupkg files from those source folders will be available. (You'll see the source(s) listed in the Package Manager, and you'll find the packages on the "Browse" tab when you're managing packages for a project.)

Here's an example nuget.config to get you started:

<?xml version="1.0" encoding="utf-8"?>
<configuration>
    <packageSources>
        <add key="MyLocalSharedSource" value="..\..\..\some\folder" />
    </packageSources>
</configuration>

Backstory

My use case for this functionality is that I have multiple instances of a single code repository on my machine. There's a shared library within the codebase that's published/deployed as a .nupkg file. This approach allows the various dependent solutions throughout our codebase to use the package within the same repository instance. Also, someone with a fresh install of Visual Studio 2017 can just checkout the code wherever they want, and the dependent solutions will successfully restore and build.