How can I add subtitles with imovie?

Yes it can be done.

Use a lower-third title of your choice. You can open the font window to adjust the font and size if you want.

It is a little tricky because there is a limit to how many titles you can add to any one clip. So the secret is to add one clip per subtitle. Select the frames in your event that you would want for the first subtitle, and add them to your project. Then start with the next frame of your video, and add the frames for the next sentence that you would want to subtitle. Repeat until you are done. Then add 1 title per clip for your subtitles.

In the event files you may have long clips. In the project files you have short, virtual clips, which are really in and out points that point to the event. But having these short virtual clips will enable you to add as many titles as you need, while keeping the entire video.

Also, to facilitate this, you will need to do the following:
1) In iMovie/Preferences be sure to check "Display Timecodes". This will enable you to see the exact frame you are selecting.
2) Click View/Playhead Info. This will enable you to see the exact frames as you skim over a clip with your cursor.

hey appleman,
i noticed your reply here... it was helpful but i still don't get it. perhaps you could enlighten me?
first of all, i had to use imovie hd (6.0.3) because imovie '08 wouldn't import my movie clip... i'm frankly baffled at how crippled and useless this newer version is.
i managed to create subtitles one by one by splitting my movie with cmd-T, typing my title, dragging the slider and checking the preview until the title appeared for the right length of time, and clicking "add". this worked well but was extremely slow, so i looked for a more efficient way.
then i read your post and tried following your advice. i split my entire movie into clips at the appropriate intervals for subtitles (using cmd-T).
at this point i got stuck.
first of all, i notice imovie allows adding multiple subtitles, but i couldn't find a way to sync them to my movie.
i tried dragging the titles to the appropriate spots, between clips, but unfortunately, imovie fades these titles out before the clip ends!
if i extend the title's duration by dragging the slider, imovie re-splits the movie to fit the length of the title!
can imovie somehow be made to understand that the length of the clip is also the length i want the subtitle to be???
also, what's the point of imovie's multiple subtitle feature? does it work? can i move from one subtitle to the next? how is this done?
thanks a lot in advance!