See Fishing to learn all the ways you can catch fish.
To use the fishing rod:
- Bait your fishing rod by dragging a stack of sugar over to the item icon in your inventory.
- Sit down in a Chair near the water where fish are swimming, and equip the fishing rod to your hotbar. Use the fishing rod by pressing the corresponding number key on your keyboard.
- When you've got a fish, a mini-game will start, requiring you to press a corresponding series of keys on your keyboard. When you've successfully completed the mini game, you're inventory will be updated with fish meat, scales and sometimes treasure.
You need to cast your line into a body of water that actually has fish swimming in it. Shallow water does not contain fish.
You must unlock Survivalism->The Basics->Advanced Tools to be able to craft the fishing rod. The fishing rod can then be crafted in the players inventory.