Thanks for the tutorial. How does TGA transparency work in photoshop without using GIMP? Just with an alpha channel?
Open Photoshop and open the image file that you want to make transparent. You need to ensure your image is in RGB format. If you're unsure you can check the mode by selecting "Mode" from the "Image" dropdown menu at the top of Photoshop and ensure "RGB" has a check mark next to it.
Fill your canvas will any color of your choosing. You can easily do this by selecting the "Fill" option from the "Edit" menu.
Select the area of the image you want to erase. Use any selection tool you prefer, but many people find the magnetic lasso selection tool works well for larger projects and the magic wand is ideal in erasing solid color backgrounds. If you use the magic wand make sure to have your settings at a level 10 tolerance and check the anti-alias and contiguous options at the top of the screen.
Reverse the selected area by choosing the "select inverse" option once you see the marching ants selection box around the background. Select the inverse by either right-clicking on the object and selecting the option from the menu that pops up or use the keyboard shortcut "Shift + Ctrl + I."
Create a new layer by right-clicking on the selection and choosing "Layer via Copy" from the menu that opens. The newest layer will appear at the top of your "Layer" palette menu.
Save the selected area by choosing "Save Selection" from the "Select" menu at the top of the screen. You don't need to specify a name for the saved selection, but make sure the "New Channel" option is selected.
Change your view on the "Layer Palette" to "Channels" to view the alpha channels. Select the "Alpha 1" channel you created in Step 5 and adjust the brightness and contrast using the "Image>Adjustments>Brightness/Contrast" option.
Remember that the lighter gray the alpha channel is, the more transparent the image will be. And the darker gray the alpha channel is, the more opaque the image will be. Continue to play with the image until you're satisfied with the results, and always save your work.