STEP 1: Download Greenpois0n jailbreak (link at the end)
STEP 2: Connect your iPod to your computer via USB then launch Greenpois0n jailbreak application and hit "Prepare to Jailbreak (DFU)" button.
STEP 3: Follow the steps shown on the next screen shots to put your device in DFU mode.
- Continue holding sleep, then press and hold home for 10 seconds.
- Now release sleep button but keep holding home for 15 seconds.
STEP 5: Now your device is being jailbroken.
STEP 6: Now press "Quit" button.
STEP 7: Restart your iPod, now you will notice Loader application icon on your springboard, hit this icon.
STEP 8: Now press "Cydia", then "Install Cydia". After finishing you will be asked to remove Loader from your device, click "Remove", then press Home button, the device will restart automatically.
STEP 9: After your device restart you will find the Cydia icon, Congratulations.
Download iOS 4.1 for iPod 4G/3G.
Download Greenpois0n jailbreak for iOS 4.1.