With a PNG image, open image file in your graphics program and set palette transparency i.e. the "background" color of X and O to transparent in the images palette. You should be able to do this with any graphics application. If you have also X and O images with non-transparent backgrounds just swap non-transparent image to a transparent version on mouse click event handler.
HTH
Teme64
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Is your button a button control? Then you may consider some other control as a "button". You could try to use 4x4 picture boxes instead. It has all events you need and much easier graphics handling. With a button control you would have to do drawing yourself.
HTH
Teme64
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