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If you have a multi-layered file, start by selecting that layer from within the Layers panel. If not, don't worry. Then, with your selection already created, simply press the "Add layer mask" button at the bottom of the Layers panel. The checkerboard pattern shows areas that are now transparent.

If you are working on a file like a JPEG, your Background layer will be converted into a regular layer that can support transparency. If you want to preserve this new mask, be sure to save your file as a Photoshop file.
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