One of my least favorite things about Facebook is its privacy settings. First, they're hard to find. Second, they're not located in one place. Third, new applications, such as Facebook Places, constantly are added, meaning that users have to remember how they accessed their privacy settings in the first place and update them.
I recently spent some time reviewing how to change some of Facebook's privacy settings and making sure that my profile page was as secure as I would like it to be. Finding some of those settings and figuring out how to update them was rather tedious and, in some cases, downright complicated. I'm only going to address some of the common privacy settings; if you have a specific question, please submit a comment, write on the wall, or tweet IDS.
Make events private. This is one of the easier privacy settings to address, but it still seems that many users overlook them when setting up an event. As a result, strangers and, sometimes, party crashers, show up at what was meant to be a private party.

To make an event private, simply uncheck the "Anyone can view and RSVP." If you don't want people to know who's been invited to the party, also uncheck "Show the guest list on the event page." It's a handy feature if you're afraid of hurting someone's feelings by not including them in the invitation.
Make your Wall Photos private. Wall Photos are kind of sneaky. When you upload a photo to your wall, it's saved in a new album. That album's settings are based on your status updates, so if your updates are set to "Everyone," guess what? "Everyone" can see your Wall Photos, too.

To access the settings for your Wall Photos album, go to the album. Click "Edit Album Info." You should see a privacy dropdown menu and a "Custom" option. Click on "Custom," and you will be able to customize your privacy settings for the album.
Keep your status private. When you first join Facebook, you inherit the default settings for everything - your photos, your updates, your News Feed. To change your status update settings, you will have to go to "Privacy Settings."

Once you're on the Privacy Settings page, you will need to click on "Customize Settings." Doing so takes you to a page where you can manage who sees your updates, photos, places, et cetera. To access the window pictured above, click on the dropdown menu for "Posts by Me." Click "Customize" and adjust your privacy settings to your liking. In this window you not only can choose who sees your updates, but you can also hide your updates from specific individuals.
Secure your profile. Your profile is one of the most dangerous places on Facebook. Almost any information you enter will be linked to a page with related information. Your hometown, for example, will link to pages populated by Wikipedia, thus granting access to advertisers.

You can add your location and hometown as long as you limit who can see them in your privacy settings. You should never show your full birthdate; in fact; it's recommended that you not show your birthdate at all. The other sections included in "Basic Information" are highly personal. If you don't want people to know information about you, don't share it. You don't have to fill in every single box with a checkmark or information. The other portions of your profile also need to be considered. If you don't want people to know your educational background or work history, don't share it. Most of the other sections - Arts and Entertainment, Sports, and Activities and Interests - are relatively neutral, but you should still be cautious. Only "like" things that you genuinely like and be careful about liking pages that may be inflammatory or derogatory. The Contact Information section is a minefield; use extreme caution. Only share information that can't cause you harm. For example, don't share your cell phone number or address. Do share your website and Twitter ID if you're comfortable doing so.
Protect your profile photo. Your profile photo can be seen by everyone, and it can be difficult to hide. Choose a sensible photo. Don't use a provocative photo (Remember, everyone can see it.) or one that is copyrighted.

Also remember that advertisers can use your profile photo unless you change your settings. To do so, go to your Privacy Settings. Click on "Manage." Now go to "Edit Your Settings" under Apps and Websites. There are several items of interest on this page, but you only need to visit "Instant Personalization" and "Public Search" and disable their abilities to access your profile.
Control the News Feed. This area isn't necessarily a privacy issue since the News Feed is for you; however, it's helpful to know how to hide or show statuses.

To access this window, click on "Most Recent" in the News Feed. You should see a small arrow next to "Most Recent." Click on it to access a dropdown menu. Click on "Edit Options." The window pictured above will appear. You can then add friends to the "Show More" or "Hide" categories. You can also control how many friends show in your feed. The higher the number, the more updates you will see in your feed.
Source: ZDNet