Although I’m 99% sure the ATI manager software has this ability also, with the nView software by nVidia you can easily make your Windows XP taskbar transparent.
Here’s how it’s done:
1. Download and install the latest nVidia driver set.
2. Go to the Control Panel and double-click the NVIDIA nView Desktop Manager icon. See below for example.
3. Click the Effects tab, check Enable taskbar transparency, set the level desired, click Apply. See below for example.
..and that’s all there is to it. Ta-da.. transparent taskbar. For best effect, make sure to have a wallpaper that is an image of some kind (a pattern, photo, etc.) and not just a solid color.

Rich, could you explain how to do this with an ATI graphics card? How can I be sure downloading the new driver wont screw something up? How do I know I have the right driver download? I have Radeon X600.
I have no idea since I don’t have any ATI video hardware. Your best bet would be to post the question to the PCMech forums and include the link to this article for reference.
I just posted a tip on this today.
See the ‘Trackback’ link at the bottom.
[...] Rich posted an article on how nVidia users can make their taskbar transparent. Well, if you are not an nVidia and want to apply this effect, give a look at the appropriately [...]
Cool, thanks guys.
This is an old nvidia feature thatused to work well but usually does not work on newer systems but reports that it is disabled because some other application also uses 3D. There is now way of finding what other application causes the trouble
It doesn’t work…
I’m using theme of windows vista (red) edition on my xp,
when I’m doing like you do in nvidia desktop viewer, I think I failed, hehehe…
It makes both the taskbar and the objects on it transparent.
I don’t like transparent icons. They are hard to see.