How to Apply Rounded Edges to Pictures in Illustrator
Adobe Illustrator supports applying rounded edges to a picture -- but not in a single step -- so there's no filter that can perform the task for you. In a few steps, however, you can create the illusion that a picture's edges are rounded with a mask. You must draw the shape you would like for this mask and define how round the rectangle's corners will be. Be sure the shape you create for a mask complements the contents of your picture.
Select "File" and "Place" to import a picture into Adobe Illustrator.
Choose the Rectangle tool and click on the top left corner of the photo. A Rectangle tool dialog box should appear.
Specify the rectangle's size and corner radius and click OK. A rectangle with rounded edges should be in view.
Drag the bounding box handles with the Selection tool to adjust rounded corner rectangle's width and height if necessary.
Select the rounded edge rectangle and the photo with the Selection tool.
Choose "Object" and "Clipping Mask," then select "Make" to convert the rectangle and the photo below it into a clipping set. The rectangle's shape masks the photograph and a picture with rounded edges should be in view.