If your image has a transparancy map as well, then you need to set up a second material component in the Texture editor. To activiate a 2nd texture for trans, click on the next empty column over (the first one will have your pic with bump component). Now do like Bladesmith said to switch the 2nd component to picture and load the transmap in the middle box. Now your object will be transparant anywhere the transmap is black (semitrans where grey) Hope that helps :)