Open your image of Mount Baker in Washington State.

Create a new RGB image at the same size as your original image. Create and position your type (in this case, Playbill). An optional step is to access Edit > Free Transform to scale the type to the desired size. Press Enter to implement your changes.



Make sure your anti-alias type settings are set to Smooth.

Control + Click on the type layer to load the selection. Go back to your original image and choose Select > All and then Edit > Copy.

Make sure your new image type layer is still active. Edit > Paste Into will achieve the desired result.

If you have resized the image, click on the type layer and add a vector mask (2nd icon from the left).



Then, Filter > Unsharp Mask at Amount, 500%, Radius, 0.2 pixels and Threshold at zero. In this manner, you are only sharpening the image inside the type. Of course, you can make whatever adjustments you wish.

In the layers palette, choose drop shadow with 80% opacity and then from the popup menu, flatten the image.