Not sure what you mean by fading images together but there is several ways to blend images together...
1. Double click on layer you want to blend with one underneath and play with the blending sliders...
2. Reduce opacity of top layer to create crossfade fx
3. Play with blending modes (next to opasity in layer palette you have dropdown that says normal...multiply is often very handy...try different ones to find the one you are after)
Hope that those helps.... not sure if answered you question though :D
Ok... i think i know what you mean, like how corel offers you the effect to create a image opacity from 100 to transparent. simple but you will require ps CS2 or above.
Create a gradient, set the [1st] opacity stop to 100% and the colour stop to white (if this is the background colour your working with) then set the [2nd] opacity stop to 0% and the colour stop to white as well.
Then create the gradient on a new layer. Place it below the image you'd like to fade. Right click > create clipping mask
There you go, magic.
If you confused, view the image attached
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If you're trying to make two images look like they fade into each other, I think the effect you're looking for is a "feather" effect. The method I use is definitely not the best, but it's what I know.
1) Import both images into photoshop on separate layers.
2) Select the marquee tool. Up the top in the properties bar, change the feather value to 15 or 20 px (you will need to play with this depending on the size and resolution of the image).
3) Use the marquee tool to "select" the edge that you wish to fade into the next image. Press delete and you should see that the image is removed from the marqueed area, as well as gradient type effect that extends just past the marquee area.
If any of this doesn't make sense, or if anyone has any other way to do it, just let me know.
Works... But slightly more complicated then my method because the fade can't be altered as easily because you cutting off the orginal image
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