According to reports, the Redns0w 0.9.10 b1 team has completed the untethered jailbreak of Apple's iOS 5 mobile operating system, version 5.0.1, for the iPhone 4, the 3GS, the iPod Touch 4G and the iPad 1. Previously, Pod2g had dispatched his jailbreak project to both the Chronic Dev-team and iPhone Dev-team. While the iPhone Dev-team have put 5.0.1 untethered in to RedsnOw 0.9.10 b1 and PwnageTool, the Chronic Dev-team, on the other hand, have put untethered 5.0.1 jailbreak into a Cydia package.
If you have one of the recommended devices - the iPhone 4, the 3GS, the iPod Touch 4G and the iPad 1 - and still haven't updated to 5.0.1 yet, it is advisable to do so as soon as possible, since the SHSH window is still open for 5.0.1. However, if you unlock via gevey or ultrasn0w, make sure you only get to 5.0.1 via a custom IPSW. Once you're at 5.0.1, you will have to use the latest redsn0w 0.9.10 to both jailbreak and untether.
If you're already at 5.0.1 with a tethered jailbreak, you will have two choices. The first is to run redsn0w 0.9.10 over your current jailbreak (you will have to deselect Install Cydia if you do that). The second is to install the Cydia package prepared by the Chronic Dev-team. It is to be noted that the patches are the same regardless of your choice.
However, there are a number of people who are using a hybrid 5.0/5.0.1 configuration. If you are among them, then do not attempt to install this untether over that current setup. You will most likely get into a reboot cycle. It is advisable to sync and freshly restore the OS to 5.0.1 and then install the jailbreak + untether.
Here is the tutorial on how to jailbreak 5.0.1 (untethered) for the iPhone 4, the 3GS, the iPod Touch 4G, the 3G and the iPad 1.
Step 1: You will have to connect your iDevice with your PC via USB; open iTunes and then Restore to iOS 5.0.1. If you are already running iOS 5.0.1, you can bypass this step.
Step 2: Next start Redsn0w 0.9.10 b1 and press the Jailbreak button.
Step 3: Select “Install Cydia” and click on “Next”.
Step 4: Here, you will have to make sure your device is both turned off and plugged in to the computer before clicking “Next”. You will then be guided into entering DFU mode. You will have to quickly hold down the “Power” button and, while holding the “Power” button, also have to hold the “Home” button. Release the “Power” button after few seconds but keep holding the “Home” button until installation begins.
Step 5: The iOS 5.0.1 untethered jailbroken will take a few minutes.
(Information from PWNAGE TOOL)
Check out the tutorial video: