Saying "no" is a toddler's way of asserting independence by making choices. If this is one of your child's favorite words, you might want to try some of these ideas:
1) Give choices rather than telling the child what to do.
2) When giving choices ask questions that have options rather than simple "yes" or "no" answers. Chances are, if you ask your child one of these questions the answer will be "no."
Here are some examples of giving options:
3) Remember to keep the options simple. Two or three options is plenty to give the child a sense of independence. Do not give a child a choice when there really is no choice in the matter. For example, it is not an option whether or not a child holds your hand while you cross the street. In this situation, tell your child, "We will walk when you hold my hand. It is dangerous to cross the street by yourself."