The Fishing Rod is a player made tool. It allows the player to fish through holes in ice created by an Ice Drill. It has limited durability and is a two handed item. It is made with 3 Twigs and 1 Rope, and requires a Workbench.
To fish, make a hole in the ice using an Ice Drill and click 'E' with the Fishing Rod equipped. A window with 2 bars should open. Let the bars settle down. After a while, a blue circle should sparkle/flash on the right bar - that's a sign a fish is biting. Click 'E' to start reeling it in. A blue fish then appears on the vertical bar. When the fish touches the bottom of the bar, you fail to catch it. When you first push E the fish will rise slowly, but as you hold it longer the fish speeds up. The goal is to make it touch the upper edge of the bar by holding 'E' as long as possible until right before the horizontal bar hits the red zone, then release and wait, and press again right before it settles back to the green zone. On the last "tug" you'll probably have to let it fill up past the red (but if you had one or two good tugs prior, it'll still catch). If you hold 'E' for too long (so the white slider reaches the right edge of the horizontal bar), you fail. Good luck!
The fishing rod will break after 16-17 fish are caught.