Goblin Tinkerer

The Goblin Tinkerer is a new NPC added in the 1.1 update. He reforges items, giving them different stats. He also is a vendor NPC, this means that he can buy and sell items.

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Locating Him
In order to spawn the Goblin Tinkerer in a world, the only thing you need to do is defeat the Goblin Army at least once in that world. You do not need to beat the Wall of Flesh to find him. He will then normally be found in the Dungeon, Jungle or Underground (though he technically can be found anywhere under sea level,) bound much like the Mechanic or Wizard. You will need to rescue the Goblin Tinkerer by right-clicking on him. In the dungeon, he may be found above or below sea level, though he is usually in the rocky layer.

Once rescued, the Goblin Tinkerer will stay in the vicinity until you build and/or assign a suitable Home for him. If he dies before you rescue him, he will respawn at a random location and will still need to be rescued. Reloading the game or dying after finding the Tinkerer without rescuing him will also cause him to respawn at a random location, and he will still need to be rescued. It is highly recommended that you have a suitable house already built for the Goblin Tinkerer before you set out to find him. If you have a suitable house for him when you find him, he won't move in until he dies so that he can respawn near your home.

An easy way to find the Goblin Tinkerer is to just search the entire dungeon and exit the world if he's not there. When you enter the world again, the Goblin Tinkerer will respawn in a different location. If you search the dungeon and exit/enter the world enough times, eventually he will respawn in the dungeon and you can rescue him there. The easiest way to teleport him from the dungeon to his house is to use the King Statue.