Oil or wax the blade, then wrap the knife in clingfilm.
Soak the sheath without the knife in it, for a few minutes.
Then put the knife in the soaked sheath, and using a teaspoon, press around the shape of the handle, pushing the leather into shape. Leave the knife in, and put somewhere warm and dry, like an airing cupboard ( Not on a radiator ) for 24 hours. Remove the knife, and as the leather is still damp, stain it now and put ( just the sheath ) back in the cupboard to dry for another 3 or 4 days.