<marquee><h1>SIM unlocking</h1></marquee>

The majority of iPhones are sold with a SIM lock, which restricts the use of the phone with one particular carrier, a common practice with subsidized GSM phones. Unlike most GSM phones however, the phone cannot be officially unlocked via inputting a code. The locked/unlocked state is maintained on Apple's servers per IMEI and is set when the iPhone is activated.

While the iPhone was initially sold on the AT&T network only with a SIM lock in place, various hackers have found methods to "unlock" the phone from a specific network. Although AT&T is the only authorized iPhone carrier in the United States, unlocked iPhones can be used with an unauthorized carrier after unlocking. More than a quarter of the original iPhones sold in the United States were not registered with AT&T. Apple speculates that they were likely shipped overseas and unlocked, a lucrative market prior to the iPhone 3G's worldwide release. Unlocking iPhones in the U.S. is done because many would-be users dislike switching carriers or consider AT&T's monthly fees too expensive.

On November 21, 2007, T-Mobile in Germany announced it would sell the phone unlocked and without a T-Mobile contract, caused by a preliminary injunction against T-Mobile put in place by their competitor, Vodafone. On December 4, 2007, a German court decided to grant T-Mobile exclusive rights to sell the iPhone with SIM lock, overturning the temporary injunction. In addition, T-Mobile will voluntarily offer to unlock customers' iPhone after the contract expires.

AT&T has stated that the "iPhone cannot be unlocked, even if you are out of contract". On March 26, 2009 AT&T in the United States began selling the iPhone without a contract, though still SIM-locked to their network. Such iPhone units are often twice as expensive as those with contracts, because Apple and AT&T lose the deferred income. Vendors in Hong Kong, Italy, New Zealand, and Russia (among others) sell iPhones not locked to any carrier. In Australia, four major carriers (Three, Optus, Telstra, and Vodafone) sell locked phones, but will unlock upon request, in addition to Apple selling unlocked iPhones directly.