Download RedSn0w 0.9.6b5 for Windows (use xp mode and run as administrator on vista or windows 7)
Once your iPhone is running iOS 4.2.1/4.1, execute the downloaded RedSn0w 0.9.6b5.
Hit the Browse button and select the downloaded iOS 4.2.1/4.1 firmware. RedSn0w will recognize the firmware, now hit the Next button.
Select Install Cydia and Install iPad Baseband options. This will add Cydia to iOS 4.2.1 and replace iOS 4.2.1 baseband with iPad 3.2.2 baseband 06.15.00. Hit Yes if you want to update baseband to unlock iPhone.
Now you’ll be instructed to put your device into DFU Mode. Follow the on screen instructions.
Once your device goes into DFU mode, RedSn0w will start jailbreaking it. Once done, you can find the Cydia icon on your iPhone
That’s it. You’ve successfully jailbreak iOS 4.2.1/4.1 on iPhone 3G and now have baseband 06.15.00