From Sue Chastain,
Your Guide to Graphics Software.
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If you have a picture that was taken with the camera tilted or scanned at an angle, Photoshop offers two tools to fix this quickly--the measure tool and the crop tool. Here are step-by step instructions for straightening a crooked photo or scan in Photoshop and Photoshop Elements, plus a way to correct perspective at the same time.

Compatibility: Photoshop 6 and higher, Photoshop Elements 2.0 and higher

Measure Tool Method (Photoshop Only)

1. Select the measure tool, from under the eyedropper tool in the toolbox (Shortcut I).
2. Click at one point on the horizon, the hold the mouse button and drag across, releasing the mouse button at the other end of the horizon. In other words, drag a line across the document to indicate what should be level. It does not have to be the horizon; it could be a fence line, a roofline, the edge of a shelf, or anything else you know should be perfectly horizontal.
3. Go to Image, rotate canvas > arbitrary.
4. The rotate canvas dialog appears with a number already filled in. Click OK.
5. Your image is rotated and the canvas expands to accommodate the extra space.
6. Use the crop tool to trim the edges.

The crop tool method is a little quicker because you will need to crop anyway, and this takes care of both straightening and cropping in one step. Also, if there is any perspective distortion, you can correct it at the same time.

Crop Tool Method

1. Select the crop tool from the toolbox (Shortcut C).
2. Drag out a crop marquee. Don't worry about the overall size, but position one horizontal edge near the horizon line. Again, it does not have to be the horizon; it could be a fence line, a roofline, the edge of a shelf, or anything else you know should be perfectly horizontal.
3. Move your cursor to just outside the marquee near a corner. You cursor icon will change to a double-pointing curved arrow indicating that you can rotate the marquee.
4. Rotate and move the marquee so that one edge follows a horizon line.
5. After you get that one edge aligned with the horizon, reposition all four edges to mark the exact crop area.
6. If you have vertical lines in your image that don't line up with the vertical borders of the crop marquee, you can correct these by checking the box for 'perspective' on the options bar. (Photoshop only. Elements users see note below.)
7. With the perspective option enabled, you can manipulate the corners of the crop boundary to correct perspective. Be sure to keep all four corners within the document boundaries. If Photoshop can not perform the crop with perspective correction, you will get an error.
8. Once you're happy with the crop marquee, double click inside it to finalize the crop.

Note for Photoshop Elements: The perspective option in the crop tool is not available in Photoshop Elements. To correct perspective in Elements, you should convert the background to a layer by double clicking on it. Then, select the move tool and hold the Ctrl (Windows) or Cmd (Mac) key down while dragging a corner handle.