A 13-year-old coder that goes by the name AriX has released an application called iJailBreak that allows users to install third-party applications on the iPod touch. The application was just updated to version 0.2.1, which fixed several bugs.
According to the developer, The only user interaction required is for you to restart the iPod Touch. The software works on Intel-based Macs running Mac OS X Tiger – a PowerPC version is in the works.
iJailBreak is available for free download from Google Code.