Doors – How to reduce the size of a door opening to fit smaller door

From you description, it sounds like you have a hair over 1 1/2 inches of extra space to make up. If this is correct consider this method. Place a full 1x4 (or whatever the depth of the wall may be) on both sides, as long as the new door frame will still fit comfortably in the new opening. When ever possible, I like to mount the hinge side to a solid petition without excessive shims. This makes it more solid without having to bridge a large gap with your finish nails, and makes it a lot easier to perfectly plumb the hinge jam. I often replace the center hinge screw on the jam side with a longer matching screw that will attach to the jam. This does a few things for you. One, you don't need as many nails, gives a much more solid feeling and sounding door, and gives you a tool to fine adjust the plumb if necessary.(especially on heavier solid wood doors. Just like with security screws on an entry door. After you are sure you are happy with the plumb on the hinge side, simply use visual to get an even gap on the top and latch side, in that order. You can then use shims on the latch side and shoot your finish nail just below your shims. this keeps the shims from dropping as you work down the jam. i don't usually shoot through the shims because they often split and I may want to slightly adjust them before the trim casings are installed.

Use the extra width to properly hang the door . . . there is no need to disassemble the replacement door jamb.

1. Temporarily hang the unit in its final position. Use complementing wedges at the upper corner to position/secure the top jamb between the jack studs, and complementing wedges at the top and bottom of the side jambs to secure the each of those.

2. Adjust the wedges such that:

   • the hinge pins lie along a vertical line that is plumb in both directions (this is the key to a door that will remain resting at any angle)
   • the door closes uniformly against the door stops
   • there is a uniform gap between the door the jambs, about a nickle's thickness
   • the door operates freely

3. Scribe all 6 edges of the 3 jambs relative to the sheet rock

4. Label the wedges for ease of final install
5. Remove the unit from the rough-opening, set it on saw horses
6. Trim the jambs to their scribe lines (all 6 edges of the 3 jambs) using a power planer (or as @Tester101 commented, with a hand plane or belt sander)

'Complementing wedges' are a pair of wedges with identical taper, inserted from opposite sides of the rough opening.

If you don't own a power planer already, here is a google search. I suggest a light weight model with carbide blades that auto-align.