iOS 4.1 jailbreak has been released by Geohot called Limera1n. This is a one-of-its-kind jailbreak tool.
Limera1n can be used to jailbreak iPhone 4, iPhone 3 GS, iPod touch 4G/3G, untethered running iOS 4.1 and Pad on iOS 3.2.2. Basically, Limera1n can jailbreak almost all iDevices except 3G and iPod Touch 2G.It has not been confirmed whether Limera1n can jailbreak these devices or not, hence it is recommended that 3G and iPod Touch 2G users do not download Limera1n onto their devices before it is confirmed.
Limera1n is only functional on Windows currently. In order to install Limera1n, first download the software from the internet onto your device (only those mentioned above). Mac and Linux versions of Limera1n are expected to come out in the market soon. So Mac and Linux users, do not get disappointed.
After you have downloaded and installed the device, connect your device to your computer via the USB port and open the application. After the application has been opened, click on the prompt “Make it Ra1n”. Then wait for the device to enter recovery mode by holding “Home” + “Power” buttons together. Release the “Power” button and wait for the device to enter DFU mode. After that’s done, start Limera1n from your device and install Cydia. Now restart your device.