

Make the changes that you want to it, and save it as a PNG file with Alpha (transparency).

Select the image at the top left of that dialog, copy it, and open the pasted image using your graphics editor. Select the folder or icon you wish to customise, then Get Info on it. Here I’m using the new version 12 of GraphicConverter. To create a custom icon you’ll need a decent graphics editor capable of working with PNG files. This article explains how to do that, how it works, and goes on a brief archaeological dig into the history of Mac OS.

Giving special folders their own icon makes them more distinctive than simply applying a tag to them. You might have more than one copy of an app, or two different versions which by default use identical icons. It’s sometimes valuable to be able to customise icons for folders and apps.
