Letters in Sanskrit are believed to be loaded with mystic power that are yielded when pronounced correctly.

The sanskrit alphabet is well categorized and hence easy to learn. First, the alphabet is categorized into vowels and consonants as follows:

Vowels - स्वराः

Vowels are pronounced by a smooth flow of air thro' the mouth. Sanskrit language has 13 vowels as shown below

अ a आ ā इ i ई ī उ u ऊ ū ऋ ṛ
ए e ऐ ai ओ o औ au अं aṁ अः aḥ

Traditionally there are two more vowels:
ॠ ṝ ऌ ḷ

Simple Vowels

Vowels can be classified further as simple and diphthong vowels. A simple vowels is also called a monophthong. The vowel has the same sound at the beginning and end. Simple vowels can be long or short. The difference is in the length of duration of pronunciation. Long vowels are pronounced twice as long as the short vowels.

Short Long
Gutterals अ a आ ā
Palatals इ i ई ī
Labials उ u ऊ ū
Cerebrals ऋ ṛ ॠ ṝ
Dental ऌ ḷ

Diphthong

A diphthong is formed by the combination of two vowels in a single syllable, in which the sound begins as one vowel and glides smoothly towards the second. In Sanskrit all diphthongs are long vowels.

Gutterals + Palatals अ + इ (a + i) = ए e आ + इ (ā + i) = ऐ ai
Gutterals + Labials अ + उ (a + u) = ओ o आ + उ (ā + u) = औ au

Anusvāra and the Visarga

Lastly there are the Anusvāra and the Visarga. Anusvāra is a nasal sound whose pronunciation varies based upon where it appears in the word. Visarga literally means sending forth. It is pronounced as if the air is expelled from the lungs. However, it's pronunciation varies based upon the preceding vowel.

Anusvāra अं aṁ
Visarga अः aḥ

Consonants - व्यञ्जन

Consonants are pronounced by stopping the air flow at the appropriate place. They can be pronounced only with the help of the vowels. So, traditionally when the alphabet is chanted, the consonants are combined with the vowel अ.
Consonants are grouped into mutes, semi-vowels and sibilants.

Mutes - स्पर्श

These consonants are pronounced by the complete closure of the various mouth organs. In fact, they are further categorized into several groups based on the mouth organ used for pronunciation.

Gutturals - कण्ठ्य
These letters are pronounced with the help of the throat.
Palatals - तालव्य
These letters are pronounced with the help of the jaw.
Cerbrals - मूर्धन्य
These letters are pronounced with the tounge hitting the roof of the mouth.
Dentals - दन्त्य
These letters are pronounced with the help of the teeth.
Labials - ओष्ठ्य
These letters are pronounced with the help of the lips (the two lips should meet each other).

Furthermore, the first two letters in each group are the hard consonants (also called as surds or toneless - अघोष) and the next three are soft consonants (also called as sonants or toneful - घोषवत्). The last letter in each group is also a nasal (अनुनासिका) i.e. the letter is pronounced with the help of the nose.
The first letter, third letter and the nasal letter of each group are pronounced with a small breath or aspiration. They are referred to as unaspirates or consants with small expiration (अल्पप्राण). The second and fourth letters of each group are pronounced with a great breath or aspiration. They are referred to as aspirates or consonants with a great expiration (महाप्राण).
Surd - unaspirate (अघोष - अल्पप्राण) Surd - aspirate (अघोष - महाप्राण ) Sonant - unaspirate (घोषवत् - अल्पप्राण) Sonant - aspirate (घोषवत् - महाप्राण ) Nasal - unaspirate (अनुनासिका - अल्पप्राण)
Gutterals - कण्ठ्य क ka ख kha ग ga घ gha ङ ṅa
Palatals - तालव्य च ca छ cha ज ja झ jha ञ ña
Cerebrals - मूर्धन्य ट ṭa ठ ṭha ड ḍa ढ ḍha ण ṇa
Dentals - दन्त्य त ta थ tha द da ध dha न na
Labials - ओष्ठ्य प pa फ pha ब ba भ bha म ma

Semi-vowels - अन्त:स्था:

Like the vowels, these letters are pronounced by the smooth flow of air. However, like the consonants the sounds are made by stopping the air flow at the beginning of pronunciation. Hence, they are called "semi-vowels".
The semi-vowels have a special significance in Sanskrit. The Bija (seed) mantras are formed by these letters. Several Yoga breathing exercises use these letters as well.
There are five semi-vowels as shown below -

Palatal य ya
Cerebral र ra
Dental ल la
Cerebral ळ ḷa
Labial व va

Aspirate and the Sibilants (ऊष्मन्)

Sibilants make the hissing "s" sound. The sound is made by focussing the air intensely through a narrow channel. There are three sibilants in Sanskrit. The Aspirate is the sound made from the throat

Palatal श śa
Cerebral ष ṣa
Dental स sa
Gutteral ह ha

In Sanskrit, when vowels combine with consonants, the vowels are represented by special symbols. Vowels are generally represented by the same symbol irrespective of the consonant they combine with.
A combination of a consonant and a vowel yields a single syllable. Every syllable has one or two mātras (मात्र). Mātra is a unit of length in pronunciation. In other words, the length of a syllable is measured by a mātra. Short vowels and consonant combinations with short vowels have one mātra. Long vowels and consonant combinations with long vowels have two mātras.

ka with all the mātras

Below is a list of all mātras with the consonant k (क्)
ka with Matras

In Sanskrit there are special rules when blending two consonants. The rules are as follows:

  1. If the first consonant ends in a vertical line then remove the vertical line and the second consonant.
    Example:
    • त्+य → त्य - सत्य (satya)
    • ष्+ठ → ष्ठ - ओष्ठः (oṣṭhaḥ)
  2. If there is no clear vertical line in the first character then:
    1. Use a stop sign and add on the second.
      Example:
      • क्+ल → क्‌ल- क्‌लेश (kleśa)
      • ट्+व → ट्व - खट्वा (khaṭvā)
    2. Truncate the first letter and write the second.
      Example:
      • क्+ल → क्ल- क्लेश (kleśa)
      • क्+य → क्य - वाक्य (vākya)
    3. Write the second letter under the first.
      Example:
      • द्+ध → द्ध - बुद्ध (buddha)
      • द्+भ → द्भ - उद्भव (udbhava)
  3. If र is one of the letters then -
    1. If र is the first character then it goes as a "c" above the second character.
      Example:
      • र्+म → र्म - धर्म (dharma)
      • र्+प → र्प - दर्प (darpa)
    2. If र is the second character then it goes as a "forward slash" or an "upside down v" below the first character.
      Example:
      • क्+र → क्र - चक्र (cakra)
      • ट्+र → ट्र - राष्ट्र (rāṣṭra)
  4. Every nasal combines with a member of its own group.
    Example:
    • लिंग / लिङ्ग (liṅga)
    • पंच / पञ्च (pañca)
    • कंठ / कण्ठ (kaṇṭha)
    • दंत / दन्त (danta)
    • कंप / कम्प (kampa)
  5. Sometimes consonants blend to become special conjunct characters.
    1. क्+ष → क्ष - मोक्ष (मोक्ष)
    2. त्+र → त्र - मन्त्र (मन्त्र)
    3. ज्+ञ → ज्ञ - यज्ञ (यज्ञ)
    4. द्+द → द्द - उद्देश (उद्देश)
    5. द्+म → द्म - पद्म (पद्म)
  6. If श is the first character, it optionally gets a special symbol -
    Example:
    श्+र → श्र - आश्रम (आश्रम)