In this tutorial we are rounding the rorners of a rectangle (I know you can create a rounded rectangle by using the shape tool) the princliple of this tutorial is to show you how to round any corner,this is great for interfaces, I also use this technique a lot on my photo realistic art.
Create a new layer, Make a shape, select it and fill with foreground color. Alt/Option delete.
selection name the new channel "shape"
Switch to channels Palette and click on the "shape" channel. Cmd/Crtl +D to deselect all
Filters>Blur>Gaussian Blur. Use a higher setting for a more pronounced effect or a smaller setting for a more subtle effect.
Open the levels box: Cmd/Ctrl +L
This is where the magic happens. Drag the left triangle to the middle, now drag the right one to the center until all 3 arrows are on top of each other. Click ok.
click on the channels thumbnail (1) to turn on the selection. Click on the
RGB thumbnail to select all channels (2)
Go back to the layers palette. Create new layer (layer 2)