If you load the image from a file using one of the D3DXLoadSurface* or D3DXCreateTexture* functions, then one of the parameters is a ColorKey parameter. Set that to the value of the color you want to be transparent. (This is frequently chosen to be an ugly color that stands out, so that the color is never needed in the actually visible part of the image, and is obvious when editing the image, such as magenta, or 0xFFFF00FF in ARGB.) You must also make sure that your texture format includes an alpha component (D3DFMT_A8R8G8B8 is the most straightforward and common). Once you've done that, you also must make sure that at least alpha-testing is enabled and configured properly.