Download a software called ZiPhone from http://download.ziphone.org/
This software is available for Win and Mac users only.
Plug your iTouch in and restore it through iTunes. This will wipe everything off your iPod and update it. Make sure it is updated to firmware version 1.1.4 only.
Leaving you iTouch plugged in, open ZiPhone and choose the second option: Jailbreak.
Many scary things will happen on your iPod but fear not. After it is done, you will find the Installer app on your iTouch home screen.
Note: This is to be done entirely at your own risk.