This method was discovered by Krishna Nirvana from XDA forums. This will work for Samsung Galaxy Y running Android 2.3.5 and Android 2.3.6. Do not try this method on the Samsung Galaxy Y Duos. For the Galaxy Y Duos, read the rooting guide here.
1. Take out the micro SD card from your phone or get a micro SD card. Download the “update.zip” file from the link given below this post.
2. Copy the update.zip file to the root directory of your micro SD card.
3. Make sure your phone battery is at 100% charge.
4. Switch off the phone put the micro SD card in it.
5. Switch it on by pressing and holding the [Home] + [Volume UP] key. Release the keys once the Samsung logo appears. The phone will now boot in to recovery mode.
6. You have to navigate the menu using the Volume UP and Volume DOWN key, for selecting an option press the Home key.
7. From the recovery menu select the option “Select update.zip from sdcard” and press the Home key.
8. Wait for the phone to apply the update.zip file. Do not press any buttons or switch off the phone before the update is completed.
9. Once update is complete, the Galaxy Y will restart.
10. Congratulations, you have rooted your Samsung Galaxy Y.
Thanks to Krishna Nirvana from XDA for the method and update file.