Depending on what you mean, there are two possibilities:
(1) If you want certain colors within the picture to be transparent so
the picture in the back shows through those spots (e.g., you have a
white background, but you really want a see-through background), then I
believe you will need to use picture editing software (such as Adobe
Photoshop) to make the colors transparent. Then, insert the picture into
your presentation. I believe you would need either a GIF or PNG picture
(not a JPG) for this to work.
(2) If, however, you want the picture to be somewhat faded so that the
picture behind shows through the entire picture, you can set the
transparency of a picture within PowerPoint to some number like 50%. The
details of how to do this depends on the version of PowerPoint you have,
but I believe right-clicking on the picture and choosing Format Picture
will work in most versions.
--David