A gnome costume is relatively simple... The common, "gnome look" is similar to one of Santa's helpers on vacation.
The cloth pointed hat is a must! It's not as stiff as a magician, witch or wizard's hat. The hat and shirt usually seem to be in solid, but different colors—mostly red, green, gold-yellow and sometimes blue. A bushy white beard is helpful. A rotund figure is common—you might want to stuff your shirt with a pillow. Leggings and a loose shirt with big buttons down the front are good.
See the excellent collection of gnome costumes on the Costume Wikia: Gnome.