How to Create a Transparent Overlay in Photoshop
Photoshop's overlay feature can give your image the extra effect it needs because it adds light tones and patterns over the image's existing layers. With little effort, you can make your image stand out. A transparent overlay appears lightly over the layer without overpowering other elements in the background. Photoshop allows you to set the opacity level that works best for you. A higher opacity level makes the overlay more visible while a lower opacity makes it less visible. Use the layers tools that come installed on Photoshop to create a transparent overlay.
Open the Photoshop file to which you want to add a transparent overly. Click "Layers" and "Show Layers" in the Photoshop menu or press the "F7" key to open the "Layers" palette.
Go to the "Layers" palette. Select the layer you want to create a transparent overlay for and drag it into the "Create a New Layer" button at the bottom of the "Layers" palette to duplicate it.
Double-click the layer containing the duplicated layer in Photoshop's "Layers" palette. The "Layer Style" dialog box opens.
Go to the "Styles" section on the left side of the dialog box. To customize the color overlay, check "Color Overlay" from the "Styles" list.
Go to the "Color Overlay" section on the right. Click the color picker for the overlay and select an overlay color. Click "OK" to apply it. The "Layer Style" dialog box closes and you are redirected to the "Layers" palette.
Move the "Opacity" slider (at the top of the "Layers" palette") from "100%" to the transparency level you wish to set. You can gauge the transparency level on your image below the dialog box. Click "OK" once your image is at the appropriate opacity level.