1. Open your photoshop t-shirt model file. (Find a link to the Threadless Flickr group on our blog).
2. Go to SAVE AS… and save a copy of your t-shirt model image as black + white, by going to IMAGE / MODE / GRAYSCALE.
Choose DISCARD color info, and MERGE layers.
Go to command/L to increase contrast in the LEVELS window by sliding the middle arrow.
Save this document as a .psd. (I have found that jpegs and tiffs won’t work.) Close that file–you will use it later.
3. Import your illustration artwork into your layered t-shirt file. (From Illustrator, select your design, then copy and paste into your doc as SMART OBJECT. From Photoshop, select all of your layers and drag or paste into your layered t-shirt file.)
4. Click on the layer that contains your illustration. Go to FILTER / DISTORT / DISPLACE.
5. Try these settings as a jumping off point:
6. When prompted for displacement image, open your black and white copy of your t-shirt model photo that you saved earlier.
7. Assess the displacement change. It may be too much (lower the numbers in the displacement menu) or not enough (increase numbers) distortion. Adjust numbers until it looks believable.