On July 26, 2010, the Library of Congress ruled that under the DMCA (Digital Millennium Copyright Act), jailbreaking was legal. This was a big deal at the time, as prior to the ruling the legality of jailbreaking was a bit of a mystery.
The decision was part of a list of DMCA exemptions, which unfortunately just expired. So the Library announced a new batch of exemptions today. And although jailbreaking is still legal, it appears there are some significant caveats...