The Define Transparency feature can be used to specify which parts of a 32-bit picture should be transparent or hollow. This feature is only available when editing 32-bit (16 million colors + alpha channel) pictures. If you're picture isn't 32-bit, then you will need to use the Convert To option to convert it before attempting to use Define Transparency.
Use either the Color Picker or Magic Wand tools to select areas of the picture that you want to become transparent. The Color Picker tool will select all pixels that match the selected color, while the Magic Wand tool will select only adjacent pixels that match the color of the selected pixel. To broaden the scope of the colors selected you can increase the color tolerance. A setting of zero will select only those pixels that exactly match the color you select. Higher settings will expand the selection to include pixels with similar colors that fall within the tolerance range.
When you are satisfied with how the picture looks, click the Apply button to make the selected pixels transparent. If you make a mistake, click the undo button to restore the selection to its previous state. Transparent areas will display with a light gray checkered background like this:
When you are finished, click the OK button to return to your picture.
This feature is only available when editing 32-bit pictures.