If you have the Pets expansion, you can become a werewolf! How exciting! It can be a little tricky to accomplish it though...
First, you need to know who the Leader of the Pack is. The Leader of the Pack (hereafter referred to as LotP) is a big dog/wolf with glowing yellow eyes, and will only show up on your lot at night. The LotP is an NPC, and can make your sim into a werewolf. The LotP is often black, but can come in any of the standard wolf colours listed below.
There are other wolves that will show up on your lot at any time - they can come in a variety of colours including black, white, grey, and brown. Their eyes do not glow. These wolves do fulfill the "see a wolf" want but they cannot make your sim into a werewolf.
You can either shoo them from your lot if you do not want to deal with wolves, or interact in a friendly way with them, to encourage wolves to come to your lot. This may make it more likely that the LotP will show up on your lot.
There are rumors that certain things can increase the frequency the wolves (and the LotP) will show on your lot, like having a lot of trees and toddlers on the lot. However, neither are necessary... just wait a few nights and watch your porches, as the LotP will often show up at one of your exterior doors.
When the LotP arrives, greet him, and then begin interacting in a positive way with him, petting and playing.
This will increase your relationship with him. Continue interacting with the LotP to build up your relationship, until it reaches 100/100 in the relationship panel.
Then, let your sim idle - stop interacting with the LotP and all other objects. If they try to go do something, cancel the action. It may be helpful to have them go and sit down somewhere.
The LotP will eventually get the autonomous action to "nibble" on your sim. Your sim will reach down to pet the LotP, and he'll gently bite their hand; the leader will run off, and then your sim will glow orange, and will be a werewolf!
If your sim doesn't get nibbled the first time, just wait, and the LotP will return to your lot. Greet him, and then idle again, and wait to be nibbled upon.
What's it like being a werewolf?
Your sim will automatically build body skill, which can be useful for careers that need a high body skill. Your sim will gain 1 body skill point per day as a werewolf.
Motives will change at night - energy will raise and hunger will drop.
Personality slowly changes. Your werwolf's personality will change toward 10 outgoing, 10 active, 10 playful, 0 nice, 0 neat over the course of several days.
Your werewolf can attack the burgular if one shows up, and get back stolen goods, which will go into your werewolf's inventory.
Your werewolf can howl, which will scare sims with low bladder on the lot into wetting themselves, and can summon wolves to the lot.
Your sim will also be able to turn other sims into werewolves, too - they don't need to get nibbled on by the LotP at that point. You can "savage" other sims and make them werewolves, but the savaged sim will become furious with your werewolf for doing so.
If your sim has a custom skintone, they will not get hairy in their werewolf form like sims wearing one of the four Maxis shades (or a default replacement of one of the four Maxis shades). For that, please read this article: http://www.modthesims2.com/article.php?t=202550