How to Blend Photos in Photoshop

1- Open up Photoshop.

2- Open the 2 photos you want to blend. I am using a beach scene and a beautiful sunset sky as the blending image.
Make sure you have the two images in two separate windows like below.

3- Unlock the image you want to blend.  You do this by unchecking the little lock on the layers palette. you will also see the layer rename from background to layer 0.

4- Click and drag (holding the shift key)the image you want to blend and drop the image onto your other image.

5- Delete/minimize the image you have just dragged onto the other image.(we do not need it any more)
Resize the image to fit over your 1st image. Basically you should only see the blending image now.
If you need to adjust it size wise so it fits better with your first image do this now.

6- You can now see in the layer palette your 2 images. Make sure the blending one is selected and click on the blending mode tab. A drop down box will appear. You can now try out the different blending effects to see what you like the best.

7- You can also adjust the opacity of the blend mode to increase and decrease the opacity of the effect.

8- To make it quicker for you to toggle through the different bland modes, ensure the move tool is selected on the left tool bar. Select a blend mode, then, hold down the SHIFT key and tap on the + key. This will allow you to toggle quickly through the different blend modes.
Below are 2 different blend modes to show the versatility of the blend mode option.