1. Make sure you have downloaded the latest version of iTunes 8.2 and that you have updated your iPhone to the latest 3.0 firmware.
3. Launch PwnageTool, agree to the warning, and select the “expert mode”.
4. Select your iPhone model (iPhone 2G) and click the blue arrow to continue.
5. Now if your computer doesn’t automatically detect the iPhone 2G 3.0 firmware you downloaded in step 1, browse for it.
6. You will then have a menu with 7 choices. Choose “general”, which will allow you to set your own root partition size. Click the blue arrow to continue.
7. You will now have 3 checkboxes. Make sure that “activate the phone” and “enable baseband update” are checked. You will also need to increase the root partition size. Usually setting the root partition around 700MB is enough. Click next to continue.
8. When you get to the “bootneuter settings”, only check the boxes for “unlock baseband” and “auto delete bootneuter.app”. Click the blue arrow to continue.
9. The “Cydia settings” allow you to choose packages to download now so you don’t have to download them from Cydia later. Choose any of the packages you want and click next.
10. You will now have the possibility to choose your own boot logo. I will skip this step as it is useless.
11. After setting your own boot logos (if you chose to), you will now be able to build your own IPSW file. Click the blue “build” button to start.
12. If it’s the first time you do this, you will get a message asking you to upload the bootloader file v3.9. When asked to search the web for it, click “no”. When asked to browse for it, click “yes” and select it from the folder we created in step 2. Repeat the process for bootloader v4.6.
13.You will then be asked if you’re a legit iPhone user. If you click “yes” this will not unlock the phone, thus defeating the whole purpose of this guide. Make sure you click “no”.
14. You will then have to choose a folder to save your custom firmware (ie. desktop). You custom firmware will now be built, which may take up to 15-20 minutes. Be patient.
15. Enter your administrator password.
16. When asked if your iPhone has been pwned before, say “no”, even if it has. Make sure your iPhone is connected to your computer and turn it off, as prompted.
17. This is the tricky part. You will now have to follow directions to enter DFU mode. It will ask you to hold the home and power buttons for 10 seconds. Then, you will have to release the power button and hold the home button for 10 seconds.
18. If done correctly, you will get a message saying that you successfully entered DFU mode. Close PwnageTool and launch iTunes.
19. iTunes will then give you a message saying it has detected an iPhone in recovery mode. Click OK.
20. In iTunes, hold the Alt/Option key and click “restore” at the same time. It will open a window where you will have to select the custom firmware that you built a few minutes before.
21. iTunes will then restore your iPhone 2G using the custom firmware. This step may take 15-20 minutes so again, be patient.
22. Once done, you will have to “set up your iPhone”, either as a new phone (which I recommend), or from backup.
23. Reboot your iPhone and you should have a Cydia icon on the springboard.
24. Congrats! You just unlocked your iPhone 2G using PwnageTool 3.0