I did a ton of research for you guys and put it together in a nice video. I hope you enjoy it!
In this video you'll learn how to create the Staff of Herding and unlock the secret cow level in Diablo 3. In Whimsyshire, you will find happiness, cuddly bears, and rainbows. Keep an eye out for Creampuff and NightMarity because they can drop a legendary rainbow sword!
List of items required:
Black Mushroom - Act 1 Cathedral
Leoric's Shinbone - Act 1 Leoric's Manor in the fireplace
Liquid Rainbow - Act 2 Dhalgur Oasis, talk to alchemist
Gibbering Gemstone - Act 3 Caverns of Frost Level 2 from Chiltara
Wirt's Bell - Act 2 from Squirt the Peddler (100k gold)
Plans: Staff of Herding - Act 4 from Izual
Also please go upvote on reddit!