Instructions
Power on the Xbox 360 gaming console.
Select "My Xbox" and choose your current gamertag.
Click "Change gamertag" and then "Enter new gamertag."
Type in your new gamertag using the onscreen keyboard or the Xbox 360 keypad controller. You are allowed to modify your gamertag once for free. After that, it will cost you 800 Microsoft Points. If you do not have any Microsoft Points currently associated with your Xbox Live account, you will be directed to enter your payment information.
Select "Yes" to save the changes.