1. Start small, but just start. There's no need to purge your entire collection all at once. Start by sorting. Create a collection of your child's favorite toys. Invite them to help. Depending on the size of the favorites pile, subdivide it into two or three smaller piles: one to be left out to play with, and two others to be rotated. Create a pile of the "second favorite" toys. Create a pile to donate. Some children can get very excited about giving toys to other children in need.
2. Put the majority of the toys that you aren't donating (all of the second favorites and some of the favorites) into storage "for awhile." This can include some of the favorites that you rotate, and also some of the toys you'd prefer to never see again! Label boxes carefully; this is key. Make sure to leave out some open-ended toys that can be used in myriad ways: blocks, dolls, figures for imaginative play etc.
3. After a certain period of time, revisit those labeled boxes. If your children haven't asked for the less beloved toys, and you feel good about letting them go, donate the entire box-- WITHOUT OPENING IT! Treat it like Pandora's Box! Once you open it, kids will inevitably fall in love all over again with that pink, sparkly, plastic thing the dog chewed on!
There is a certain magic in a visually beautiful and peaceful play environment. Being deliberate about the toys you invite into your home can pay off in deeper, more long lasting play, easier clean up and a greater appreciation of quality toys. Happy decluttering!