Step 1: Download iOS 4.2.1 for your version of iOS device.
Step 2: Update/Restore to iOS 4.2.1 firmware
using the IPSW file you just downloaded via iTunes 10.1.
Step 3: Download Redsn0w 0.9.6b4 for Windows / Mac
Step 4: Start Redsn0w 0.9.6b4 and point it to iOS 4.2.1 firmware to proceed with the jailbreak.
Step 5: Now select “Install
Cydia” and click “Next”.
Step 6: Turn off your device and connect your device to the computer. Now click “Next”. You will now need to put the device in DFU mode. Hold “Power” button for 3 seconds, without releasing power button, hold the “Home” button for 10 seconds and release power button but keep holding Home button for another 30 seconds.
Step 7: Wait for Redsn0w to do the rest for you. Once done, your iPhone or iPod touch will restart automatically and you will find it jailbroken on the latest iOS 4.2.1 firmware.
For iPhone 4, 3GS (New Bootrom), iPod touch 4G / 3G / 2G, iPad ONLY:
Step 8: Now from here onwards, whenever you want to do anything related to jailbreak like SSHing into your device, or running Cydia, you must first run your device in the so called “jailbroken state” on every reboot by using “Just boot tethered right now” option in Redsn0w.