How to make a transparent background/selection on an image using GIMP

1. Open your image.
2. Select the area you want to make transparent.
1. Select the appropriate selection tool from the Tool window or the Tools - Selection Tools menu on the Layer window. I usually use the magic wand/fuzzy select (Select contiguous region) tool or the Select regions by color tool.
2. Click in the region you want selected. Use shift-click to add more regions/colors.
Tip: It's easier if you zoom in (View - Zoom menu) to see finer details of exactly what you're selecting.
3. In the Layer window (the one showing your image), select Layer - Transparency - Add Alpha Channel. If this is blanked out then it's already done. This makes sure your image can store transparency data.
4. Select Edit - Clear. This makes the selection transparent.
5. Save the file.
Note: If you save it as a PNG file, be sure to select the 'Save colour values from transparent pixels' option in the Save as PNG dialog box.

Finished ^_^

NOTE: IE does not support showing PNG transparencies (alpha channels) natively. There are a few work arounds for this the simplest approach is to save the image as a GIF (which all major browers support transparencies for).

When saving your image as a GIF from within Gimp, it will prompt you to export it - you can select either Indexed or Greyscale - however, on the next screen (Save as GIF) be sure to check the 'Interlace' option.