The iPhone Dev Team has just released Redsn0w 0.9.6b4, which provides the first jailbreak that works with Cydia and MobileSubstrate for all iOS 4.2.1 devices. The updated version of redsn0w 0.9.6b4 packed with the new Cydia and kernel patches for Windows and Mac OS which allows you to jailbreak final version of iOS 4.2.1 running on iPhone, iPod touch and iPad devices.
How To Jailbreak iOS 4.2 Final With Redsn0w 0.9.6b4:
Step 1: Connect the iPod Touch or iPhone or iPad to your Mac using the USB cable.
Step 2: Update your device to iOS 4.2.1 firmware using the IPSW file you just downloaded (Download from here) via iTunes 10.1.
Step 3: Run Redsn0w 0.9.6b4 and point it to iOS 4.2 to proceed with the jailbreak. Click Next to continue, once the firmware has been verified.
Step 4: RedSn0w will now prepare the jailbreak data.
Step 5: You will now have a new screen where you can select packages to install. Select Cydia and other options of your choice. We would not recommend enabling Multitasking on iPhone 3G, as it will slow down the performance.
Step 6: Now make sure your device is both OFF and PLUGGED IN to the computer before you click Next.
Now you will be presented with a screen where you will have to hold “Power” button and then while holding the “Power” button, you will now have to hold “Home” button too. Now after few seconds release “Power” button but keep holding “Home” button until installation begins.
Step 7: Sit back and enjoy while redsn0w will do all the rest for you. Once done, your iPhone, iPad and iPod touch will restart automatically and you will find it jailbroken on the latest iOS 4.2 firmware.