Hosting a Domain Not Registered To Me

I have built a site for a friend, that has already bought his own domain. Instead of going through the process to setup a server just for him, or even transfering the domain to my name, I would like to host his domain on my server.

Is this possible? Please help guide me through this process. His current site is hosted through yahoo!

No problem. He just needs to set it to use the DreamHost DNS servers.