Transparent Background

I have made this page background light grey so you could tell image has transparent background

1)    Open a new image (select the size you want); be sure to select "transparent" and "16.7 million colors":

2)    The background of your new image should looked like checks (color may vary) depending on your preferences:

3)    Ok, let's say we have our button done; it looks sorta like this:

4)    Now to the important stuff; Go to "Colors" and select "Set Palette Transparency..."

5)    Click "yes" when this screen pops up:

6)    Select "optimized Median Cut" and "Nearest Color"; click "ok":

7)    Ok, it doesn't show here, but when the "Set Palette Transparency" screen comes up, move the box over so you can see your button image; when you put your pointer on the background it will turn into a dropper; click the area you want to be transparent; in this case it is the background.  That will set the number at 255 as shown below:

8)    Now click "File":

9)    Now we have to file it and name it.  You must file the image as a GIF.  Gif's are are the only image types that can be transparent (there are exceptions, but they are another story):

10)    TaDaa!