1. First, open two images. Any two images, and post them onto some type of background. Do not flatten the layer.

2. For the image on top, apply a layer mask.
--> To do this, all you have to do is click on the small icon on the Layers Pallete that has a circle inside of a square.

3. Now, grab the gradient tool.

4. Click on where you goto change the gradient colors. Change one color to black, have the other transparent (0% opacity).

5. Now, find an edge of the top image you want to blend. Click somewhat-far away from that, hold down the left click. and slowly drag the tool past the edge of the top image.

6. You will start to notice that the solid edge is disappearing, and is blending with the other image. Keep doing this until you get it how you like it.

7. That's it. =D When you are done, just flatten the layers.

--> If anyone has questions, because I may not have explained it well enough, feel free to pm me. =D