You want to convert square image into round corners image by using Adobe Photoshop CS3. There are lot of articles available on net explaining about round corners in very easy and efficient way. But I am writing this article for future reference and for rest of fresher designers who wish some easy step-by-step instructions. So simply follow steps and achieve round corners for images:
1. After opening Adobe Photoshop CS3. File –> Open –> Browse image to which you want to add round corners.
2. Select Rounded Rectangle Tool either from Left Panel (as shown in screenshot selected) or simply press U key of keyboard.
3. Draw rectangle upon the image such that rectangle lines should be near to image dimensions so that we can hide the rest part (out on the rectangle lines).
4. From Layer menu bar –> Layer Style –> Blending options…
5. In Layer Style window –> Under Advanced Blending –> Set Fill Opacity values as 0% –> OK.
6. Under Paths tab near by Layers and Channels tab on right side –> Select Shape1 vector mask –> Right click –> select Make Selection… option.
7. In MakeSelection window set Feather Radius as 0 pixels and check Anti-aliased checkbox –> OK.
8. From Edit menu bar –> Copy Merged.
9. Create new document by File –> New… and then Edit –> Paste.
10. Save your image with appropriate type and done successfully.