UPDATE: Since this how-to was first written things have changed. Sony has released firmware 2.01 which makes this downgrade impossible. A PSP bricker trojan was released because of this antivirus software will classify both the good and bad downgrade files as harmful. You should do more research into the current state of the downgrade before attempting. As far as we know our firmware links are still good, we are not hosting them so we can not vouch for their safety.
C.K. Sample, III, TUAW / WIN Blogger and author of the forthcoming book, PSP Hacks, got his hands on the version 2.0 downgrader and wrote up a thorough how- to complete with pics for us. He even takes the extra steps to upgrade and downgrade yet again, just to make sure such a thing is possible.
As you can see, I have 2.0 running with the browser on my PSP.
Step 1: Download the downgrader from either here, here or here. Then make sure you get a copy of the original 1.5 firmware upgrader. I found my copy here.
Step 2: Connect your PSP to your computer via USB. On your memory stick, create a folder called UPDATE inside /PSP/GAME/ and place the EBOOT.PBP file from the 1.50 update inside this UPDATE folder.
Step 3: Unzip MPHDowngrader.zip. Drop overflow.tif into your /PSP/PHOTO/ folder. Put both h.bin and index.dat in the root of your Memory Stick.
Step 4: Disconnect your PSP from your computer and plug in the AC adapter.
Step 5: Navigate to Photo then Memory Stick via the PSP’s menu system and start scrolling down through your photos until you reach the overflow.tif picture.
You’ll know you’ve hit it when everything freezes and you get a black screen with a bunch of white text output.
If your PSP freezes without going to this black text screen, then hold the power button for about 10 seconds until the PSP shuts down, then hit the power button again to start it back up. Repeat this step until you get that black screen.
Step 6: Don’t panic. Hold the power button for about 10 seconds until the PSP powers off. Hit the power button again. Your PSP will start up, and if you navigate to your System Information, you’ll discover that your PSP thinks it is running version 1.0 of the firmware. It isn’t and you cannot run homebrew (yet).
Step 7: Navigate to Game—>Memory Stick, hit the X button, and navigate to the 1.5 updater. Make sure you have your PSP plugged in or the upgrade won’t work. Click the X button and update like you normally would. At the end of the upgrade you will receive an error saying that the upgrade failed and to contact Sony. Don’t panic. Ignore this and again force your PSP to power off and reboot.
Step 8: After the PSP reboots you will receive an error screen that is scary and confusing because it is in multiple languages. Don’t panic. Find the language you can understand and read the corresponding line. It notes that your preferences are fragged and that you need only hit the O button to restore some default-ish settings. Hit the O button.
Step 9: The PSP will start back up and you will go through the initial setup like the day when you first bought your PSP. Do so and then go to the system info pane again, where you will see that you are rocking version 1.5. Run homebrew at will.
I ran through this entire procedure, then I downloaded the 2.0 update and installed that again, and then yet again went through the entire procedure again. It works like a charm. It’s a little time-consuming, but you can have the best of both worlds. Have fun!