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In a container with a tight lid, preferably a glass jar, combine shallot, vinegar and mustard. Close tightly and shake well to mix. Add salt and pepper, and shake again.
Add olive oil 1/3 cup at a time, shaking very well after each addition, until smooth and emulsified (you may want to wrap a kitchen towel around the container, just in case). Taste and add more olive oil, 1/4 cup at a time, if dressing is too tart.
Use immediately or refrigerate up to 3 weeks. The chilled olive oil will form a lump, so remove from refrigerator 30 minutes before using to allow it to liquefy. Shake well before serving to re-emulsify.