Well, in this Photoshop tutorial I’m going to be teaching you how to make a ‘tattered banner effect’ like the one shown in the above image, you like the look of it? Well then, let’s get started! 
1. New Canvas
Start by creating a new document in Photoshop 7.0 or great, I used a size of 500 x 280 pixels with a Resolution of 300, use whatever settings you want here though!
2. Map Background
Download an interesting map image, such as this map of Libya, then copy it to your canvas. After adding the image to your document, lower the opacity to about 20-50%, you should now have something like this:
3. Add Grunge Brushing
After creating another new layer, find a good set of grunge brushes and splatter some over the canvas. The color I used was a dark red. (#ad230d)
Change your brushing layer’s layer mode to Color Burn and lower the opacity to about 30-40%. You should get a really cool effect like this now:
4. Creating the “Scroll”
Create a new layer then make a selection (my selection was 500 x 100 pixels) and fill the selection with a nice, dark red color. In this case I used #ad230d.
Apply the following layer styles to your ‘scroll’ layer:
Now your image should be looking like this:
5. Tattered Edges
Using the Polygonal Lasso Tool, make some random, shaky selections over the edges then delete them.
Now it’s time to add in some nice text. In this case I used Georgia as my font and then added a Drop Shadow layer style.
6. Add a Tiling Pattern
Create a new document sized around 8 x 40 then create a similar pattern to the one shown in the below image.
If you can’t get the pattern right, you can of course download the pattern from here. Create another new layer and fill the canvas with the pattern, delete all but one line of the pattern then place your pattern like shown below.
Duplicate your pattern layer and place it at the bottom section of your banner, like this.
Lower the opacity to about 50-80% and apply a Drop Shadow layer style for a nice effect.
7. Add a little Grunge
Using a grungey Photoshop brush, erase away some of your pattern layer(s), an alternative to erasing away the layers is using a layer mask, so you can edit your results afterwards.
Create a new layer then paste your map image again, re-size the map to about 65% which is just a bit bigger than the canvas. Hold ctrl and click the main banner layer, right click the selection and click Select Inverse.
Press delete on your keyboard. This should delete the outside of your banner, like shown in the below image. Change the layer mode to Soft Light and erase a few random bits with a large, soft brush.
Now we’re finished, you’ve got a totally awesome ancient banner effect!
