Basically, you can think of it as a Magic Wand tool but instead of just selecting similar pixels it deletes them. It's a great tool for quickly removing backgrounds which are just one colour - but for more complicated backgrounds where there's more than one colour it's not the best tool to pick.

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Magic Eraser tool basic function

To use the Magic Eraser tool you simply click on the background somewhere and it will vanish. If you only have one layer open, when you click to remove the background the pixels will be turned into a transparency, in other words there will be nothing there so you'll just see a chequered pattern.

How much of it is erased in one click will change depending on a few of the tool's settings which you can alter in the tool bar found towards the top of the window.

Adjusting the Magic Eraser tool

Tolerance

The higher the number you type in this box, the more pixels will be removed in one go as Photoshop will know you want to remove pixels from a broader range. Set a low Tolerance and Photoshop will only remove pixels that are more similar in colour to the pixel you clicked.

Anti-alias

This is automatically checked and you should leave it this way as it helps smooth edges. Why is this useful? Well when you add a new background, it will look like your subject belongs on that background rather than looking like something that was lifted from another shot and badly dropped onto something new.
 

Contiguous

With this ticked the Magic Eraser tool will only remove similar pixels that are sat next to each other. So if you have a building, tree branch or, in our case, a person and their hair separating some of the background the pixels which are similar in colour that are sat on the other side of the object won't be erased.

Sample All Layers

If you tick this option Photoshop will erase all similar pixels from all the layers you have created not just the one you have selected. Leave it un-ticked and only the chosen pixel colour on the layer you have selected will be removed.
 

Opacity

This defines how strong the eraser tool you're using is. An opacity of 100% will completely remove the background, leaving just a transparency (the chequered pattern). Lowering the opacity means the colour you're removing will still be partially visible. In our example, 100% opacity was set on the left image and all of the new background with a gradient on it can be seen at full strength. An opacity of 40% was applied to the Magic Eraser tool when removing the background of the image on the right and as a result the new gradient background isn't as strong.

Image with a new background: 

To add a new background we just created a new layer (Layer>New Layer) and applied a Gradient.

Make another photo visible

You can also use the tool to make part of another layer visible. For example, if you have text or a shape which you want an image to show through, the quickest way to do this is to click on the word (which is made up of a solid colour) with the Magic Eraser tool and the colour will vanish, allowing the layer under it, which has the photo on, show through.

For more techniques and tips, have a look at some of the latest techniques, or if you have a question or want more help, feel free to ask in our forums.