1. Get the RC29 update from Google ( Download ) (Link is from Google Android Website)
2. Rename it the downloaded file from signed-kila-ota-115247-prereq.TC4-RC19+RC28.zip to update.zip, and place it in the root of your Micro SD card.
(Don’t forget to unplug your handset from Computer USB before proceeding for next step)
3. Turn off your G1, then turn it back on by holding the Home+End keys until you see an icon popup after the T-Mobile G1 logo.
4. From the icon screen, open the keyboard and hit Alt+L. This will display the log saying what is happening (although you can skip this step).
5. Now press Alt+S to begin the update. Remember, the update needs to be in the root of the Micro SD card and needs to be named update.zip.
6. Once it finishes, just follow the onscreen instructions and press Home+Back to finish.
7. The G1 will reboot a few times to flash different parts of the firmware.