Make sure your wireless adapter is enabled.
Open the Networks and Sharing Center. Under Tasks (left), choose Manage Wireless Networks.
In the Manage Wireless Networks window, click Add.
Choose “Create an ad hoc network”. Press Next on the next page.
On the next page, enter a Network Name of your choice (as “iPhoneNetwork”). This is the network you’ll connect to from your iPhone. Choose WEP for Security Type (you can also choose “No Authentication (Open)”, but this way anyone in your ad hoc wireless network range can connect to your laptop.) Enter a Security Key as instructed, check “Save this network” and click Next.
You should get the “Your iPhoneNetwork is ready to use”. Before pressing Close, click on “Turn on Internet Connection sharing”.
Select your Local Area Network internet connection you usually use to connect to the internet and press Next. The next page should say “Internet connection sharing is enabled.” Press Close.
Now, your ad hoc network is ready.