Select or create a basic button. Open the Layer Style dialog box by clicking on the Add a layer style button at the bottom of the Layers palette and selecting Bevel and Emboss. from the menu that appears. From the Style drop-down menu, select Pillow Emboss— this will give your button an "embedded" effect.

Experiment with the settings to change the look of your effect. Both the buttons in the example shown above are pillow embossed, but they look different because I've set the Technique to Smooth for the top one, the settings for which are shown on the next page, and Chisel Hard for the bottom one.

Pillow Emboss options for the smooth embedded button

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