Knowledgebase
How to add, edit and assign order statuses in Magento
In Magento you can edit the preconfigured order statuses, you can add new ones and you can assign/unassign order statuses to order states. Keep in mind that order states are what actually determines the progress of an order in terms of its completion. Order statuses are assigned to states to serve as labels. The status is what you see when you manage and process orders.
To add, edit and assign/unassign order statuses log in to the admin panel of your Magento and go to System>Order Statuses. On the page that opens you'll see a table with all the existing order statuses and the state to which they are assigned (if they are assigned at all). To unassign a status just click on its Unassign button in the table. To edit a status click on its name in the table. On the edit page that opens you can change its default label, as well as the labels for each of your store views. To add a new status click on the Create New Status button that's above the table with the existing statuses. On the page that opens type a code (it's for internal use) and a label in the respective fields, and click on the Save Status button.
To assign a status to a state click on the button Assign Status to State that's on the page with the existing statuses. On the page that opens select the status that you want to assign from the Order Status drop-down menu and from the Order State drop-down menu choose the state to which you want to assign it. Mark the checkbox Use Order Status As Default if you want the status to be the default one that's displayed when the state of an order changes to the particular order state.
For screenshots and some more details you can also check out the Magento tutorial on managing order statuses.