From ModMyiFone - Wiki
This guide will teach you how to downgrade your 1.1.3 firmware for the iPhone back to 1.1.1. Now keep in mind, IT IS NOT POSSIBLE to downgrade the firmware if your phone came with either 1.1.2 or 1.1.3 out of the box. The reason for this is because it has a completely different bootloader. So if you accidentally upgraded your firmware and want to downgrade back to 1.1.1, please read on.
Downgrade Firmware
First we need to downgrade the firmware back to 1.1.1.
1. Go ahead and connect your iPhone to your computer and launch iTunes. (I had some problems trying to do this on iTunes version 7.6, I had better luck with 7.5)
2. Enter the recovery mode, hold both the power button and home button at the same time. After about 15 seconds or so the iPhone will power off. At this time, release the power button but keep holding the home button. Give it another 15 seconds and the phone will successfully enter recovery mode. iTunes will say that the iPhone is now in recovery mode and we can proceed to the next step.
3. Download the 1.1.1 firmware here. In iTunes, hold either the Shift button for Windows users or the Option button for Mac users and click the restore button. Browse to the downloaded 1.1.1 firmware and let the iPhone attempt to restore itself.
4. You will most likely receive an error from iTunes but just go ahead and ignore it for now. Download and run AppTappInstaller.exe for Windows or iNdependence for Mac.
5. AppTapp will most likely fail but just ignore it and you should see the activation screen now on your iPhone.
Jailbreak and Install Installer.app
1. Now that we see the activation screen on your iPhone, slide for emergency and dial *#301# to make the phone call itself. If the call window quickly disappears, just remove the *#301# and dial 0.
2. Answer the call and place the call on Hold. The phone will then try to call itself again but press Decline.
3. Tap Contacts, then tab the + button to add a new contact. Scroll to the bottom and tap Add new URL. The first one we are going to add is prefs: and the second one you need to add is jailbreakme.com
4. The reason why we created prefs: was to allow you to connect to a wireless network first. So basically now you need to start over, Slide for Emergency and dial 0. Answer the call then place it on Hold. On the new call tap Decline. This will take you to you contacts. Tap the newly created contact (No Name) and click on first one, prefs:. Connect to a wireless network and then go to General > Auto-Lock > Never. Repeat these steps again but this time click on the second URL, jailbreakme.com.
5. This will launch the jailbreakme.com webpage. Tap Install AppTapp. The phone may reboot itself a few times but give it a few minutes. Once this process is finished, you will see the newly created Installer.app on your main screen.
Downgrade baseband firmware
Now that the firmware has been restored, we also need to downgrade the baseband firmware.
1. Launch the Installer.app and tap System, then install the BSD SubSystem.
2. Once installed, our nice friends over at unlock.no have created an easy script to automated this process. So click on Sources in Installer.app and add: http://i.unlock.no/
3. Now install the Baseband Downgrader which is found under the Unlocking Tools category. This will take about 5 minutes.
4. Once this process is completed, you must restore the 1.1.1 firmware again.
5. Load up iTunes real quick and while holding Shift for windows users or Option for Mac users click the Restore button once again. Navigate to the 1.1.1 firmware that you downloaded earlier and let iTunes do it's thing. Once restored, you can let iTunes reactivate your iPhone and reinstall the Installer.app program by opening up Safari and navigating to: jailbreakme.com
Now that you have the 1.1.1 firmware you can easily upgrade to 1.1.2 by Following This Guide.
