Instructions
Power on the Xbox 360. Navigate to "My Xbox" when the dashboard loads.
Select your Xbox Live gamertag. Log in, if you are not automatically logged in.
Select "Change Gamertag." You may be informed of the associated price of modifying your gamertag, if this is not your first time (Microsoft charges Microsoft Points for subsequent changes).
Select "Enter New Gamertag." Enter the modified gamertag using the on-screen keyboard. Click "Yes, use this gamertag" to save the changes.