1. “I can’t commit to this as I have other priorities at the moment.” This lets the person know your plate is full at the moment.
2. “Now’s not a good time as I’m in the middle of something. How about we reconnect at X time?” This lets the person know it’s not a good time. However, you also convey your desire to help by suggesting another time (at your convenience). This way, the person doesn’t feel blown off.
3. “I’d love to do this, but …” This is a gentle way of saying no. It’s encouraging as it lets the person know you like the idea but I can’t take part due to other reasons, such as prior commitments.
4. “Let me think about it first and I’ll get back to you.”
This is more like a “Maybe” than a straight out “No”. If you are interested but you don’t want to say ‘yes’ just yet, use this.
5. “This doesn’t fit with what I’m looking for now - but I’ll keep you in mind.” Sometimes it is just best to turn the person/ offer down. Otherwise, the discussion can drag on and on.
6. “I’m not the best person to help on this. Why don’t you try X?” Again, sometimes it is best to say you’re the wrong person to help etc. If possible, refer them to a lead they can follow-up on instead.
7. “No, I can’t.” The simplest and most direct way to say no.
Source: http://zenhabits.net/say-no/ (Abridged)