The correct way to avoid SQL injection attacks, no matter which database you use, is to separate the data from SQL, so that data stays data and will never be interpreted as commands by the SQL parser. It is possible to create SQL statement with correctly formatted data parts, but if you don't fully understand the details, you should always use prepared statements and parameterized queries. These are SQL statements that are sent to and parsed by the database server separately from any parameters. This way it is impossible for an attacker to inject malicious SQL.

You basically have two options to achieve this:

1. Using PDO (for any supported database driver):

    $stmt = $pdo->prepare('SELECT * FROM employees WHERE name = :name');
   
    $stmt->execute([ 'name' => $name ]);
   
    foreach ($stmt as $row) {
        // Do something with $row
    }
   

2. Using MySQLi (for MySQL):

    $stmt = $dbConnection->prepare('SELECT * FROM employees WHERE name = ?');
    $stmt->bind_param('s', $name); // 's' specifies the variable type => 'string'
   
    $stmt->execute();
   
    $result = $stmt->get_result();
    while ($row = $result->fetch_assoc()) {
        // Do something with $row
    }
   

If you're connecting to a database other than MySQL, there is a driver-specific second option that you can refer to (for example, pg_prepare() and pg_execute() for PostgreSQL). PDO is the universal option.

Correctly setting up the connection

Note that when using PDO to access a MySQL database real prepared statements are not used by default. To fix this you have to disable the emulation of prepared statements. An example of creating a connection using PDO is:

$dbConnection = new PDO('mysql:dbname=dbtest;host=127.0.0.1;charset=utf8', 'user', 'password');

$dbConnection->setAttribute(PDO::ATTR_EMULATE_PREPARES, false);
$dbConnection->setAttribute(PDO::ATTR_ERRMODE, PDO::ERRMODE_EXCEPTION);

In the above example the error mode isn't strictly necessary, but it is advised to add it. This way the script will not stop with a Fatal Error when something goes wrong. And it gives the developer the chance to catch any error(s) which are thrown as PDOExceptions.

What is mandatory, however, is the first setAttribute() line, which tells PDO to disable emulated prepared statements and use real prepared statements. This makes sure the statement and the values aren't parsed by PHP before sending it to the MySQL server (giving a possible attacker no chance to inject malicious SQL).

Although you can set the charset in the options of the constructor, it's important to note that 'older' versions of PHP (before 5.3.6) silently ignored the charset parameter in the DSN.

Explanation

The SQL statement you pass to prepare is parsed and compiled by the database server. By specifying parameters (either a ? or a named parameter like :name in the example above) you tell the database engine where you want to filter on. Then when you call execute, the prepared statement is combined with the parameter values you specify.

The important thing here is that the parameter values are combined with the compiled statement, not an SQL string. SQL injection works by tricking the script into including malicious strings when it creates SQL to send to the database. So by sending the actual SQL separately from the parameters, you limit the risk of ending up with something you didn't intend.

Any parameters you send when using a prepared statement will just be treated as strings (although the database engine may do some optimization so parameters may end up as numbers too, of course). In the example above, if the $name variable contains 'Sarah'; DELETE FROM employees the result would simply be a search for the string "'Sarah'; DELETE FROM employees", and you will not end up with an empty table.

Another benefit of using prepared statements is that if you execute the same statement many times in the same session it will only be parsed and compiled once, giving you some speed gains.

Oh, and since you asked about how to do it for an insert, here's an example (using PDO):

$preparedStatement = $db->prepare('INSERT INTO table (column) VALUES (:column)');

$preparedStatement->execute([ 'column' => $unsafeValue ]);

Can prepared statements be used for dynamic queries?

While you can still use prepared statements for the query parameters, the structure of the dynamic query itself cannot be parametrized and certain query features cannot be parametrized.

For these specific scenarios, the best thing to do is use a whitelist filter that restricts the possible values.

// Value whitelist
// $dir can only be 'DESC', otherwise it will be 'ASC'
if (empty($dir) || $dir !== 'DESC') {
   $dir = 'ASC';
}

The short answer is NO, PDO prepares will not defend you from all possible SQL-Injection attacks. For certain obscure edge-cases.

I'm adapting this answer to talk about PDO...

The long answer isn't so easy. It's based off an attack demonstrated here.

The Attack

So, let's start off by showing the attack...

$pdo->query('SET NAMES gbk');
$var = "\xbf\x27 OR 1=1 /*";
$query = 'SELECT * FROM test WHERE name = ? LIMIT 1';
$stmt = $pdo->prepare($query);
$stmt->execute(array($var));

In certain circumstances, that will return more than 1 row. Let's dissect what's going on here:

1. Selecting a Character Set

   $pdo->query('SET NAMES gbk');
   

   For this attack to work, we need the encoding that the server's expecting on the connection both to encode ' as in ASCII i.e. 0x27 and to have some character whose final byte is an ASCII \ i.e. 0x5c. As it turns out, there are 5 such encodings supported in MySQL 5.6 by default: big5, cp932, gb2312, gbk and sjis. We'll select gbk here.

   Now, it's very important to note the use of SET NAMES here. This sets the character set ON THE SERVER. There is another way of doing it, but we'll get there soon enough.

2. The Payload

   The payload we're going to use for this injection starts with the byte sequence 0xbf27. In gbk, that's an invalid multibyte character; in latin1, it's the string ¿'. Note that in latin1 and gbk, 0x27 on its own is a literal ' character.

   We have chosen this payload because, if we called addslashes() on it, we'd insert an ASCII \ i.e. 0x5c, before the ' character. So we'd wind up with 0xbf5c27, which in gbk is a two character sequence: 0xbf5c followed by 0x27. Or in other words, a valid character followed by an unescaped '. But we're not using addslashes(). So on to the next step...

3. $stmt->execute()

   The important thing to realize here is that PDO by default does NOT do true prepared statements. It emulates them (for MySQL). Therefore, PDO internally builds the query string, calling mysql_real_escape_string() (the MySQL C API function) on each bound string value.

   The C API call to mysql_real_escape_string() differs from addslashes() in that it knows the connection character set. So it can perform the escaping properly for the character set that the server is expecting. However, up to this point, the client thinks that we're still using latin1 for the connection, because we never told it otherwise. We did tell the server we're using gbk, but the client still thinks it's latin1.

   Therefore the call to mysql_real_escape_string() inserts the backslash, and we have a free hanging ' character in our "escaped" content! In fact, if we were to look at $var in the gbk character set, we'd see:

   縗' OR 1=1 /*

   Which is exactly what the attack requires.

4. The Query

   This part is just a formality, but here's the rendered query:

   SELECT * FROM test WHERE name = '縗' OR 1=1 /*' LIMIT 1
   

Congratulations, you just successfully attacked a program using PDO Prepared Statements...

The Simple Fix

Now, it's worth noting that you can prevent this by disabling emulated prepared statements:

$pdo->setAttribute(PDO::ATTR_EMULATE_PREPARES, false);

This will usually result in a true prepared statement (i.e. the data being sent over in a separate packet from the query). However, be aware that PDO will silently fallback to emulating statements that MySQL can't prepare natively: those that it can are listed in the manual, but beware to select the appropriate server version).

The Correct Fix

The problem here is that we didn't call the C API's mysql_set_charset() instead of SET NAMES. If we did, we'd be fine provided we are using a MySQL release since 2006.

If you're using an earlier MySQL release, then a bug in mysql_real_escape_string() meant that invalid multibyte characters such as those in our payload were treated as single bytes for escaping purposes even if the client had been correctly informed of the connection encoding and so this attack would still succeed. The bug was fixed in MySQL 4.1.20, 5.0.22 and 5.1.11.

But the worst part is that PDO didn't expose the C API for mysql_set_charset() until 5.3.6, so in prior versions it cannot prevent this attack for every possible command! It's now exposed as a DSN parameter, which should be used instead of SET NAMES...

The Saving Grace

As we said at the outset, for this attack to work the database connection must be encoded using a vulnerable character set. utf8mb4 is not vulnerable and yet can support every Unicode character: so you could elect to use that instead—but it has only been available since MySQL 5.5.3. An alternative is utf8, which is also not vulnerable and can support the whole of the Unicode Basic Multilingual Plane.

Alternatively, you can enable the NO_BACKSLASH_ESCAPES SQL mode, which (amongst other things) alters the operation of mysql_real_escape_string(). With this mode enabled, 0x27 will be replaced with 0x2727 rather than 0x5c27 and thus the escaping process cannot create valid characters in any of the vulnerable encodings where they did not exist previously (i.e. 0xbf27 is still 0xbf27 etc.)—so the server will still reject the string as invalid. However, see @eggyal's answer for a different vulnerability that can arise from using this SQL mode (albeit not with PDO).

Safe Examples

The following examples are safe:

mysql_query('SET NAMES utf8');
$var = mysql_real_escape_string("\xbf\x27 OR 1=1 /*");
mysql_query("SELECT * FROM test WHERE name = '$var' LIMIT 1");

Because the server's expecting utf8...

mysql_set_charset('gbk');
$var = mysql_real_escape_string("\xbf\x27 OR 1=1 /*");
mysql_query("SELECT * FROM test WHERE name = '$var' LIMIT 1");

Because we've properly set the character set so the client and the server match.

$pdo->setAttribute(PDO::ATTR_EMULATE_PREPARES, false);
$pdo->query('SET NAMES gbk');
$stmt = $pdo->prepare('SELECT * FROM test WHERE name = ? LIMIT 1');
$stmt->execute(array("\xbf\x27 OR 1=1 /*"));

Because we've turned off emulated prepared statements.

$pdo = new PDO('mysql:host=localhost;dbname=testdb;charset=gbk', $user, $password);
$stmt = $pdo->prepare('SELECT * FROM test WHERE name = ? LIMIT 1');
$stmt->execute(array("\xbf\x27 OR 1=1 /*"));

Because we've set the character set properly.

$mysqli->query('SET NAMES gbk');
$stmt = $mysqli->prepare('SELECT * FROM test WHERE name = ? LIMIT 1');
$param = "\xbf\x27 OR 1=1 /*";
$stmt->bind_param('s', $param);
$stmt->execute();

Because MySQLi does true prepared statements all the time.

Wrapping Up

If you:

• Use Modern Versions of MySQL (late 5.1, all 5.5, 5.6, etc) AND PDO's DSN charset parameter (in PHP ≥ 5.3.6)

OR

• Don't use a vulnerable character set for connection encoding (you only use utf8 / latin1 / ascii / etc)

OR

• Enable NO_BACKSLASH_ESCAPES SQL mode

You're 100% safe.

Otherwise, you're vulnerable even though you're using PDO Prepared Statements...

Addendum

I've been slowly working on a patch to change the default to not emulate prepares for a future version of PHP. The problem that I'm running into is that a LOT of tests break when I do that. One problem is that emulated prepares will only throw syntax errors on execute, but true prepares will throw errors on prepare. So that can cause issues (and is part of the reason tests are borking).