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ArcMap has an application setting that controls the initial visibility of newly added data, but Layer Files (.lyr) and Selection Layers do not respect this setting.
Layer Files do not adhere to the ArcMap 'New Layer Visibility' application setting, found at: Tools Menu > Options > Application Tab. Layer Files have their own visibility setting, and this overrides the application setting.
Solution or Workaround
All ArcMap layers have a visibility setting. Layer Files allow saving a visibility setting to disk, as well as all other layer properties. By design, when a Layer File is added to ArcMap, the layer visibility setting overrides the application setting.
To control the initial visibility of a Layer File:
- Start ArcCatalog and browse to the location of the .lyr file.
- Right-click on the file and select Properties.
- Select the General tab on the Layer Properties dialog box.
- Check/Uncheck the Visible check box and press OK.
- Start ArcMap and drag and drop the .lyr file from ArcCatalog.
Layers created and added automatically by ArcMap (e.g., Selection Layers) are always visible when added.