Put your image on its own layer. Change your canvas size to something taller than what it is, and anchor the image to the top (so you are adding room at the bottom to work in).

On your image layer, using the rectangular marquee, select the bottom part of the image from the point at which you want it to begin fading, down beyond the edge. Then, in the menu, choose Select, Feather... and enter a value (you'll probably have to play with this a bit). Click ok, and then hit the delete key on your keyboard. This will remove the portion of the image inside the marquee, with a feathered edge leading into your image.

You'll have to play around with the settings to get the look you want, but I find this to be the easiest way.

Now your image will fade out to transparent (if you make the background layer bright pink or some kind of color, you'll be able to see the effect).

OK, Feather = "Contour progressif" and not plume.. which is another tool in the French edition.

Good idea these lessons.. I already know this Tip, another one please! I would like to learn how to draw shapes like that:

Photoshop Plugins specifically "Alienskin EyeCandy 5: Impact". There are a bunch of cool filter effects that come with that.

Ahh it seems you tamed the Alien! You used the gradiant glow I guess.. super job!

Thanks, I can't believe I didn't know that one - well, I never played so much with transparency until now. I tried with gradients tools and so on.