How do you make a layer transparent?

I know this probably should be obvious, but I can't figure it out.  I have a .psd doc with a photo that has a lovely frame around it.  I want to make the area where the photo is transparent so I can use the frame for other photos.  When I bring the opacity down, the background is white, not transparent.  Same when I use the eraser.  Thanks in advance for any help you can offer.

The background is not a layer.  It is the background.  There is a subtle difference.
Make the image into a layer by double clicking the Background in the Layers palette.  Then it will be made into a layer and you'll be able to make parts of it transparent, to where you can see the checkerboard (indicating transparency).
A transparent layer only allows you to "see through" to the layer(s) or background underneath.  Make the background and/or lower layers invisible (click the eyeball icon) or delete them to be able to see the checkerboard pattern through the transparency of the layer above.
If you're trying to make a frame you can paste over other images, select the photo and delete the image out of the inside.  Delete all other layers in the image, and save as Frame.psd or something.  Then later you can open that image, copy the layer, and paste it over other images.
Hope this helps!
-Noel

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