Problem: The transparent background of images inserted into ArcMap appears as solid white
Note: The content in this article pertains to ArcGIS versions 8.x and 9.x only. Later versions of ArcGIS may contain different functionality, as well as different names and locations for menus, commands and geoprocessing tools.
When images with transparent backgrounds are added to an ArcMap document with the Insert > Picture menu option, the image appears with a solid white background obscuring the elements behind it.
This is a known issue when inserting images with transparent backgrounds into ArcMap.
Solution or Workaround
Open the image using Microsoft Word or PowerPoint, then paste the image into the ArcMap document.