using System;
using System.Drawing;
using System.Drawing.Imaging;
 
namespace ImageUtils
{
    class ImageTransparency
    {
        public static Bitmap ChangeOpacity(Image img, float opacityvalue)
        {
            Bitmap bmp = new Bitmap(img.Width,img.Height); // Determining Width and Height of Source Image
            Graphics graphics = Graphics.FromImage(bmp);
            ColorMatrix colormatrix = new ColorMatrix();
            colormatrix.Matrix33 = opacityvalue;
            ImageAttributes imgAttribute = new ImageAttributes();
            imgAttribute.SetColorMatrix(colormatrix, ColorMatrixFlag.Default, ColorAdjustType.Bitmap);
            graphics.DrawImage(img, new Rectangle(0, 0, bmp.Width, bmp.Height), 0, 0, img.Width, img.Height, GraphicsUnit.Pixel, imgAttribute);
            graphics.Dispose();   // Releasing all resource used by graphics 
            return bmp;
        }
    }
}

pictureBox1.Image = ImageUtils.ImageTransparency.ChangeOpacity(Image.FromFile("filename"),opacityvalue);

int alpha = 0;

private void timer1_Tick(object sender, EventArgs e)
{
    if (alpha++ < 255)
    {
    	Image image = pictureBox1.Image;
    	using (Graphics g = Graphics.FromImage(image))
    	{
    		Pen pen = new Pen(Color.FromArgb(alpha, 255, 255, 255), image.Width);
    		g.DrawLine(pen, -1, -1, image.Width, image.Height);
    		g.Save();
    	}
    	pictureBox1.Image = image;
    }
    else
    {
    	timer1.Stop();
    }
}

        public static Bitmap Fade(Bitmap image1, Bitmap image2, int opacity)
        {
            Bitmap newBmp = new Bitmap(Math.Min(image1.Width,image2.Width), Math.Min(image1.Height,image2.Height));
            for (int i = 0; i < image1.Width & i < image2.Width; i++)
            {
                for (int j = 0; j < image1.Height & j < image2.Height; j++)
                {
                    Color image1Pixel = image1.GetPixel(i, j), image2Pixel = image2.GetPixel(i, j);
                    Color newColor = Color.FromArgb( (image1Pixel.R * opacity + image2Pixel.R * (100 - opacity) ) / 100, (image1Pixel.G * opacity + image2Pixel.G * (100 - opacity) ) / 100, (image1Pixel.B * opacity + image2Pixel.B * (100 - opacity) ) / 100);
                    newBmp.SetPixel(i, j, newColor);
                }
            }
            return newBmp;

int trans = 30;

pictureBox1.Image = Fade(new Bitmap(imgOld), new Bitmap(imgNew), trans);