Open one of the images you want to use and paste it on a new psd document (Ctrl+A, Ctrl+C, Ctrl+N, Ctrl+V). This is what I'm using, for example:
Open the other image you want to use and paste it above the other image. You should have two layers now. The order of layers is not important.
Now we're going to add a vector mask to the top layer. The vector mask will keep the information of the parts that will be transparent and the ones that won't.
With the layer mask selected, take the gradient tool. Notice that on layer masks you will only use greyscale colors: the darker, the more transparent the image will become on that part.
We aply the gradient were we want the top layer to be transparent:
Now we'll see the bottom layer partly, but we may want to make it more "detailed".
For this, we take a big soft brush with black selected as foreground color
...And we apply it where we want the top layer to be more transparent. We can use different brush opacities to make it look better
We would apply now the final touches as brushes, text or anything we want. The blending is already done!
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