Open your image by clicking “File” and “Open” and navigating to your image.
Open the “Layers” palette by clicking on the “Windows” drop-down menu and selecting “Layers.” A thumbnail depiction of your image will appear as the locked “Background” layer in the Layers palette.
Create a duplicate layer of the “Background” layer by clicking “Ctrl” (“Cmd” for Mac users) plus “J.” Click on the duplicate layer to select it, if it’s not already selected.
Return to your image. Under the “Select” drop-down menu, select “Color Range.” A dialogue window will open. Click on the area in your image you want to select, adding base colors to your selection.This will create a white mask in the preview window of the new dialogue window. Hold down “Shift” and continue to click on your image to add more base colors to your selection. Remember this rule, as it’s easy to get confused: White areas in the preview window will show up in the finished product. Black areas will disappear.
Speed up the process of selecting your base colors by sliding the “Fuzziness” slider to a higher number. It will add colors that are close to the ones you click. Lower the fuzziness number if you’re picking up too many colors. You can do this at any time. The fuzziness number doesn’t have to be set at the start.
Click the check box next to “Inverse” if the area you’ve selected is the section you want to disappear, such as a white sky behind a subject. In this instance, it would easier to select the sky and invert the selection to grab the rest of the photo than it would be to individually select all the other colors in the part you want to keep. If your subject is a colored box with subtle shade variations that is sitting in the middle of a white background, select the white background, then click “Inverse” to get the box.
Click “OK” to close the window.
Click the “Add Mask” button at the bottom of the Layers palette. It’s the gray square with the white circle in the middle. Your mask will be saved as a channel in the “Channels” palette. Click on the “Channel” tab to see your new channel. You will see a thumbnail of the black and white depiction of your selection that you saw in the preview window of the Color Range dialogue box.
Click back on the “Layers” tab. You won’t see your mask on your image yet because the original background layer beneath your new layer is showing through the blocked out section. Click the eye icon next to the “Background” layer in your “Layers” palette to hide that layer and leave only the new layer showing. Your mask will now appear and the masked out area will disappear, leaving your cutout.
Save the image in the .gif format to maintain the transparent background. Saving it as a .jpg will add a white background to transparent areas.