Also included: how to add graduated transparency and layer effects to the cut-outs.

SelectLayer>New>Layer from Background.

punch in a name for the layer and selectOK.

Photoshop Layer menu showing New and Layer from Background

punch theShapes tooland selectCustom Shape Tool.

Select a custom shape for your cut-out in the tool options bar.

Draw the shape in the approximate location where you want the shape tocrop your picture.

The name field for a Photoshop layer

The shape will cover the chosen area of the picture.

In theLayerspalette, swap the order of the layers by dragging the shape layer below the picture layer.

If the Layers palette isn’t visible, selectWindow>Layerto open it.

The Shape tool selected in the Photoshop Toolbar and the Custom Share Tool highlighted

Right -hit the picture layer in theLayerspalette and selectCreate Clipping Mask.

In older versions of Photoshop, this command is calledGroup with previous.

The picture layer is cropped to the shape below it.

A heart selected in the Custom Shape tool options

Draw the shape in the approximate location where you want it tocrop your picture.

The shape will cover up your picture.

Right-pick the picture layer in theLayerspalette and selectCreate Clipping Mask.

Draw the shape in the approximate location where you want it to crop your picture.

You also need to ensure that the source program supports your chosen format withtransparency.

If you want to preserve the layers for possible editing later, save a copy in thePSD format.

you’ve got the option to then paste your cutout into another document.

The Layer palette in Photoshop

you might then drag the smart object into another Photoshop document.

Areas that are transparent in the clipping mask layer make those areas transparent in the layer above.

If your clipping mask layer contains graduated transparency, then the layer above also has graduated transparency.

Create Clipping Mask option in Photoshop

In Photoshop Elements, the command isSimplify Layer.

Go toFilter>Blur>Gaussian Blur.

Set theRadiusto a high number such as30andthen selectOK.

The picture layer will be cropped to the shape below it.

Notice the edges of your picture now fade out.

Photoshop Elements Layer menu with New and Layer from Background highlighted

The Elements Name field for a layer

The Shapes Tool in Elements with Custom Shape Tool selected

A heart shape highlighted in the Custom Shapes tool options bar in Elements

Draw the shape in the approximate location where you want it to crop your picture.

The Layers palette showing the Shape Layer dragged beneath the image layer

Create Clipping Mask in Elements

Photoshop Elements Edit menu with Copy Merged highlighted

Convert to Smart Object selected in Photoshop Elements

Rasterize Layer selection in Photoshop

Photoshop Filter menu with Blur and Gaussian Blur selected

Photoshop Gaussian Blur Radius setting field

Layer Styles in Photoshop with Drop Shadow selected

In Photoshop Elements, select Layer > Layer Style > Style Settings to open a dialog where you can add the drop shadow and adjust the stroke settings.