The three were also able to lend the iPhone a Hebrew interface, thus breaking Apple's restriction on using the the phone only through the AT&T company in United States.
Apple launched the iPhone in June, granting AT&T and a few European carriers an exclusive two-year distribution deal.
Ever since iPhone's launch, many have tried to overcome Apple's data protection. Last Friday a group called iPhoneSIMfree.com said it had developed a piece of software that, when installed on an iPhone, allows the use of rival mobile services.
Dubbi, Ofir and Eli, the three Israeli hackers, bought their iPhones abroad, long before the thought of hacking its systems entered their minds.
"I knew the iPhone would be just a nice gadget and not an active phone and I didn't mind," said Ofir.
Breaking into the system didn't cost anything, but did take a long time, until one night it just started working added Eli.
The three are not ready to share just how they got the iPhone to work, but did say practically anyone could do it.
Reuters contributed to this report