Observing a parent (especially a same-sex parent) using the toilet is one of the best ways to teach her how to do the same.
Not only does observation answer a lot of your toddler's unvoiced questions about elimination, but soon the desire to mimic your behavior may spur him or her to actually ask to use the toilet and to switch from diapers to underwear. Continue allowing your child to observe you if you can avoid feeling too uncomfortable.
If you feel, however, that your embarrassment is having a negative effect on your child, suggest that he or she observe another willing family member, or look to other methods (conversation, books, direct instruction) to familiarize your child with the process.
Additional Information from HealthyChildren.org: