First you have to get the Shrinker. There is one in the first level of episode 2 called Spaceport. It's at the very end of the level. You have to find a keycard which is underwater to free the exit. Backtrack from where you enter the keycard and you'll see four buttons. Deactivate all but the second from the right. You should hear a sound. Now walk towards the exit. See that lighted area next to the keycard slot? Stand there, it's an elevator which leads you to a secret with the Shrinker. Now exit the level and start using the gun on the next level (or you could just use the cheat "give all" and use the Shrinker in any level).
Shrink an enemy, save the game, walk on him, reload the savegame 39 times.