The bad news regarding this jailbreak is that this jailbreak will be tethered on most of the recent devices such as iPhone 3GS(new bootroom), iPhone 4, iPod Touch 4G, iPod Touch 2G (MC Model), iPod Touch 3G and iPad but iPod Touch 2G (Non-MC Model) can be jailbroken untethered with this release of RedsnOw.
Developers are working hard to make the Jailbreak of iOS 4.2.1 untethered but for that you need to have your iOS 4.1 SHSH Blobs saved in order to use it.
Guide to Jailbreak iOS 4.2.1 using RedsnOw 0.9.6 b4
Step 1: Download iOS 4.2.1 using the link provided below
Step 2 : Update your device to iOS 4.2.1 using the IPSW file you just downloaded vis iTunes 10.1
Step 3: Run RedsnOw 0.9.6 b4 and point it to iOS 4.1 firmware to proceed with the jailbreak.
Step 4: Redsnow will automatically prepares the jailbreak data
Step 5: Select “Install Cydia” from the next window that appears and click Next.
Step 6: Now you need to make it clear that you Device is both OFF and PLUGGED in to your computer before you click Next.
Step 7: After Cydia installation a screen will appear that will ask you to Hold “Power Button” and after that you need to hold “Power Button” and “Home Button” Simultaneously in order to enter DFU mode.
Step 8: Follow the Steps carefully and wait until RedsnOw jailbreaks your Device. After that just reboot your iPhone or iPod and you will have it jailbroken on iOS 4.2.1.