There are two ways to do it:
1. You can set layer transparency on the Display tab on the Layer Properties dialog box. This way is only good for the vector layer.
You can also set layer transparency using the Effects toolbar as described in the following steps:
1).Click Customize > Toolbars > Effects on the main menu. The Effects toolbar appears.
2).Click the layer drop-down arrow and select the layer that you want to appear transparent.
3).Click the Adjust Transparency button Adjust Transparency and drag the slider bar to adjust the transparency.