Alpha Texture - Internal

For the Cycles version of this, go here: Alpha-Texturing in Cycles

This entry will walk through the process of creating an alpha-texture in with the Blender internal renderer.

The scene starts out with a plane (gray) which will contain the image (with transparency), and a background plane which is simply blue.

The image with transparency is shown below, which is simply the blender logo in PNG form.

The first step of creating an alpha-texture is to set the following transparency properties in the material.

Next set the following parameters in the texture.  It is in this texture that you assign the image containing the transparency.

[UPDATE 6/120/14]:  You may also need to check the Use Alpha box in newer versions of Blender.

[OPTIONAL] Finally, the material(s) receiving the shadow needs to have these parameters check also for the light to pass through the transparent parts of the texture.

 The final render of the logo floating over the blue plane.