Instructions
Select the large "Group" button in the "Super Smash Bros. Brawl" main menu.
Select the large "Brawl" button in the Group menu.
Press the "Brawl" button at the top of the screen on the character select menu. The word "Brawl" should change to "Team Battle."
Sort your players into the teams you wish by pressing the "A" button while your cursor is on top of the character picture. You can divide your four players among at least three teams: Red, Green and Blue.