psd A .psd extension file is an image file created with the help of Adobe Photoshop. PSD is the default extension used for saving a Photoshop Image which can have either a single or multiple layers which can be worked individually even after having saved the file. The file can also be saved in other formats like .jpg, .tiff, .gif or other imaging formats but if a user wants to edit the individual layers later, it is necessary to save the .psd file without overwriting it while converting it to another format. Converting a .psd extension file into an image file in another format flattens the image so that it can be viewed as a regular image. The images created using this extension are of a very high resolution and the quality in terms of clarity is extremely good as compared to other commonly used image formats like .jpg, .png or .bmp.