A student of mine recently asked for this, so I thought I’d just throw it out there just in case anyone else was having trouble with it. As usual there are a multitude of ways to do this. I just happen to like the way of least resistance. Of course, this technique works with any shape, including text.
- Open the file you want to be a rounded rectangle instead of a square image. .
- Choose the rounded rectangle Shape tool. You need to make sure you put in the radius of the rectangle you want before you use it. Say 15.
- Go ahead and draw your rectangle to the size you want inside your image. (It will make a layer so if the size isn’t right, go to Edit and Free Transform to change the size.)
- Make sure you have the image layer chosen. You may need to double click it and give it a new name. Anything besides our locked-down default Background will do because nothing can go underneath a locked down layer.
- Take the Shape layer and drag it under the image layer.
- Hold down your Option/Alt key and click once you see the overlapping circle symbol when your cursor is between the 2 layers. Then you should see the an arrow in the layers panel, and your shape in the image only when looking at the image.
This is a Clipping Mask. A clipping mask is always great because it is non-destructive to the image. It also means you can apply any Layer Effect to the shape, and both the image and the shape is moveable. A non linked mask.