*  Select the entire image by pressing CTRL-A. That should add a running dotted-line around the edges of your image.

*  After that, we'll want to round the corners. From the top menu, follow Select -> Rounded Rectangle.  If you select a value of 50% from the dialog box, a rectangle will have rounded edges.  If you select 100%, the rectangle will become an oval, and a square selection will become a circle.  The percentage is a percent of the radius of the circle the rounded edges will represent.

*  Now feather the selection by right clicking on the image and following the menu to Select -> Feather.

*  Remember that whatever pixel selection you use, there will be that many pixels on either side of the actual selection line that will fade – choosing 5 pixels will fade over a 10 pixel area.

*  When you click OK, you won't notice any difference on your image. Now invert the selection by right clicking on the image and Select -> Invert.

*  When that is done, you still might not notice anything, but the selection on your image has inverted itself. What was previously selected, is now not selected, and vice-versa.

*  Right click on the picture, select Edit -> Clear. (you can also press CTRL-K to do the same thing)

*  Violá; an image with feathered edges.  If you save as a JPG, make sure that the background color selection is set to the color of the background you will be placing the image against.  If too much of the image faded, or not enough, click Ctrl-Z, which will undo the fade operation, and start over from the top.