OK, first select whatever layer you want to make the fade effect on. Then create a layermask by going to the layers window, then hit the botton that looks like a square with a circle in it. If you hover your mouse over it long enough it will say something like "create a layermask." click it, and you will see that it added a layermask next to the layer that you selected (it will look like a white box). Cick this layermask, then select the gradient tool from your tool menu. If you don't see it, right click the paint bucket tool, and you will be able to switch to the gradient tool. Up on the menu bar you will now see some sort of gradient. There will be some options next to it, and if you click the gradient up there, you can select some more options. You are going to want the liniar gradient. As for gradient colors, you are going to want one that fades into transparency. Now click right above whatever it is you want to create the fade on, and press and hold shift. Now while holding shift, drag your mouse down over your image. Let go of the mouse button, then let go of shift.
If that makes sense to you (it's hard without diagrams...), you should have a gradient.
Fade Effect? 
Linear Mode
