I want to have a picture fade to a colored background. I know how to use transparancies, but couldn't figure how to do this. I use photoshop CS2 and illustrator CS2.
You mean like this? The Keyword for this is "Alpha Channel". You can make it using Alpha Channels. But I can only explain in german language. Search for a Tutorial with "Photoshop Alpha Channels".
Actually, it's not alpha channels, it's just masking. Simply select the layer you want to fade, click the mask button in the layers palette (it looks like a rectangle with a circle in it). Then in the MASK, not the layer, create a gradient. Done.
As most effects in Photoshop are, this can be done several ways. With alpha channels, masks, or just simple transparency blends.
or use a brush to remove a part! There are more then just 2 or 3 ways to do this! If you want to fade a picture to a certain color, just use a gradient of the color on the background and put it over your picture! and tadaa!
Question not clear....if you want colored background to be seen through picture you can decrease the opacity of the picture layer to required level. Please See attached image.
CTRL+Click the layer you want to blend, hit the 'Q' key then grab the gradient tool and go over the image, then hit the 'Q' key again and hit the delete key on your keyboard