Step 1: Make sure you have the latest version of iTunes installed (iTunes 9.2).
Step 2: Download iOS 4 for iPhone 3G to your desktop from our iPhone downloads section.
Step 3: Update your iPhone to iOS 4 via iTunes.
Step 4: Download the latest version of RedSn0w from here.
Step 5: Point RedSn0w to the iOS 4 you downloaded in step 2.
Step 6: Select “Install Cydia”.
Step 7: Follow the onscreen instructions.
Step 8: Let RedSn0w do the hard work for you. Once jailbroken, your iPhone will reboot.
That’s it!
Now as mentioned above, this is just a beta release of RedSn0w, which means you might have a few issues. One of the most common issues is that the Cydia icon appears all white. In order to fix this, simply add the following repo to Cydia and reboot your iPhone
http://apt.saurik.com/cydia-3.7.