Please see this
page for full explanation on transparent drop shadows.
1. First setup the image with a transparent background.
Create the type layer that will have the drop shadow
applied to it. This automatically inserts a new layer.
2. In the Layers palette Ctrl-Click (Windows®) or
Cmd-Click (Mac®) the mouse on the type layer. This
will select all the pixels on the layer in the shape
of the type. Notice the shape of the cursor
3. This is what the layer looks like when selected.
4. Click the eye icon to hide the type layer, then click
the empty layer underneath to make it the active editing
5. This is what the image looks like on the empty layer
with the selection.
6. Click Select > Feather. In the dialog,
enter 3 to feather the selection 3 pixels.
7. Click Edit > Fill. Then choose Black with
an Opacity of 100%, Normal mode.
8. This is the effect of the fill command. This shadow
image lies directly under the type so we need to offset
it down and to the right. Before doing so, click Select
There are other variations
to the shadow effect. You can use Select > Expand
to expand the selection, then Edit > Fill
with solid black, then use Filter > Blur >
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