Releasing a record is a major accomplishment for any artist, and should be celebrated with a great release party. A great way to throw the perfect record release party is to ask a bar or small concert venue if you can host it at their establishment on a weekday when they are usually slow. They can stand to make a lot of money off their bar, and you can have a great venue for your party. If this doesn't work, hosting the party in a large apartment or house can be just as good, especially if the house has a backyard.
The key to a great record release party, once the location has been decided upon, is of course music! Play the record at least twice through over the course of the evening, but also invite musician friends to come over and play some songs. Make the night about community. Organize a little concert, and play some of the songs off your new record, plus a couple covers or songs from past records.
Make sure to invite a lot of people, especially if the party is on a weekday. People have other plans, and might not all be able to make your party, but in order for it to be a success, you need a critical mass. If you have a fan-base, it's always nice to invite a handful of fans too, as they will doubtlessly proselytize for you after the party.
A record release party should be first and foremost about music, so don't worry too much about decorating. Use what the venue already has. If your party ends up at a bar, you won't have to worry about supplying alcohol or food, but if you host it at a private residence, be sure to also have a well-stocked bar, as it helps people (at least those people who are of age) to enjoy the songs!
Wherever you decide to throw the party, you and your guests are sure to enjoy celebrating this major accomplishment!