Open Outlook and click File in the upper left.
Click on Automatic Replies (Out of Office).
Click on "Send automatic replies" and you can specify a time period if you wish. Additionally you can set one message for internal users and a different one for external. You can also set it just for one or the other.
If sending a reply to external users you can choose to only send the message to those in your contacts or to everyone.
NOTE: What you put here is exactly what they will get. If you want your signature in your Out of Office Message you'll need to copy and paste that in below your message. The easiest way to do this is to just start a new message and copy it from there.
Once you have your message set Click OK.