One of the best ways to learn how to write natural, compelling dialogue, is to listen to people. Not necessarily people you know, because  you’re likely to get caught up in the conversation yourself and that makes it less about observing and more about discussion.

Instead, to really get a good feeling for how different people talk, you should go to a public place. It could be a coffee shop, or a restaurant, or even a park or a mall, but it should be fairly busy, but not so loud that you can’t overhear someone.

Bring your notebook so that you can write down the snippets of conversation you overhear. You shouldn’t just write down the interesting bits, the outrageous statements heard out of context, try to get a better idea of the full range of the conversation.

You don’t have to write everything down, because it is good to get a feeling for some things just by listening. When you’re just listening you are more likely to pick up other things, like accents, facial expressions, etc, which can give you a better idea for how the conversation is going.

You can do this exercise a lot, when you are running errands at the farmers market or waiting for a late friend to show up at a coffee shop, but when you do it deliberately you tend to get the best results.

After you have about a half page of notes, or just a quote you find particularly interesting, write a page of mostly dialog, ideally involving two people talking to each other. These two people can be based off the individuals you have observed or they could be entirely created by you.

If you do this exercise  enough, your ability to write accurate engaging dialog should increase. Also it is a great way to beat writers block.