How to create PNG images using Photoshop

Photoshop

First create a new image with a transparent background. Then create a mask by clicking on the "Add layer mask" in the layers palette.

Next add the graphics such as text overlays and picture frames to the image layer and use the layer mask to control the transparency. In the layer mask white represents opaque, black represents fully transparent and values between white and black represent increasing transparency.

Save a copy of the image as a PSD file for future reference and then save the image as a PNG file named overlay.png.

An existing PNG image containing trnasparency information in the alpha channel can be edited in Photoshop by loading it into Photoshop. The layer mask containing the transparency information can be recreated by selecting Layer->Layer Mask->From Transparency.

Photoshop Elements

First create a new image with a transparent background. Next add the graphics such as text overlays and picture frames and use the opacity slider for the layers to control opacity. To get a simple fade effect, you can also use the gradient tool. Once you’re happy with your image, save a copy as a PSD file for future reference and then save the image as a PNG file named overlay.png.