Install the "Remote" app from the App Store.
Direct Link to Remote app
Click on Settings
Make sure that you connected to Wifi. Also, your iPhone and Computer with iTunes Library have to be on the same network.
Remember your security code
iTunes (starting with 7.7 version) has a device option
Select your device
Enter Passcode, go to confirmation screen and click ok.
Your iTunes Library will show up on your iPhone
Remote more option
Note: After you add your iTunes library, the device icon will disappear since you won’t need it any more. If you’d like to re-enter your code, just go to Settings again, click add library, wait a few seconds and the device icon will appear in iTunes. From this point on just follow the same process described above.
Select your iTunes library
Now you have your own wireless remote for your iTunes library.
You will be able to control your library from anywhere in your house as long as you have Wifi connection and you stay on the same home network.
See our other post with video instructions: How To Configure The iPhone Remote To Work With iTunes Video