diff --git a/docs/usage.rst b/docs/usage.rst
index c8df87e5a2bdcf012cda13ce8fb98bf56b8cf980..92333920bdfa56d5c7022e0de7877f029a24a549 100644
--- a/docs/usage.rst
+++ b/docs/usage.rst
@@ -107,6 +107,24 @@ to achieve::
   # ASCII identicon can be printed-out to console directly.
   print identicon_ascii
 
+
+Working with transparency
+-------------------------
+
+.. note::
+   New in version ``0.3``.
+
+If you ever find yourself in need of having a transparent background or
+foreground, you can easily do this using the syntax
+``rgba(224,224,224,0)``. All this does is effectively adding alpha channel to
+selected colour.
+
+The alpha channel value ranges from ``0`` to ``255``, letting you specify how
+much transparency/opaqueness you want. For example, to have it at roughly 50%
+(more like at ``50.2%`` since you can't use fractions), you would simply specify
+value as ``rgba(224,224,224,128)``.
+
+
 Full example
 ------------
 
diff --git a/pydenticon/__init__.py b/pydenticon/__init__.py
index 9d484b2d71ede6487104477f7c257096ca9ab51a..4c81ac9ba40c123e5eba64fe39df691514fdb18b 100644
--- a/pydenticon/__init__.py
+++ b/pydenticon/__init__.py
@@ -218,7 +218,7 @@ class Generator(object):
         """
 
         # Set-up a new image object, setting the background to provided value.
-        image = Image.new("RGB", (width + padding[2] + padding[3], height + padding[0] + padding[1]), background)
+        image = Image.new("RGBA", (width + padding[2] + padding[3], height + padding[0] + padding[1]), background)
 
         # Set-up a draw image (for drawing the blocks).
         draw = ImageDraw.Draw(image)
diff --git a/tests/test_pydenticon.py b/tests/test_pydenticon.py
index 515b271d5f54c864c7102efd5d138bea5667e67f..d501e299a1b1f6f7a37ff529196da8a92bafcfd2 100644
--- a/tests/test_pydenticon.py
+++ b/tests/test_pydenticon.py
@@ -189,7 +189,7 @@ class GeneratorTest(unittest.TestCase):
         self.assertEqual(image.size[0], 240)
         self.assertEqual(image.size[1], 240)
         self.assertEqual(image.format, "PNG")
-        self.assertEqual(image.mode, "RGB")
+        self.assertEqual(image.mode, "RGBA")
 
     def test_generate_ascii(self):
         """
@@ -359,10 +359,10 @@ class GeneratorTest(unittest.TestCase):
         height = 200
         padding = (20, 20, 20, 20)
 
-        # Load the reference images, making sure they're in RGB mode.
-        test1_ref = PIL.Image.open("tests/samples/test1.png").convert(mode="RGB")
-        test2_ref = PIL.Image.open("tests/samples/test2.png").convert(mode="RGB")
-        test3_ref = PIL.Image.open("tests/samples/test3.png").convert(mode="RGB")
+        # Load the reference images, making sure they're in RGBA mode.
+        test1_ref = PIL.Image.open("tests/samples/test1.png").convert(mode="RGBA")
+        test2_ref = PIL.Image.open("tests/samples/test2.png").convert(mode="RGBA")
+        test3_ref = PIL.Image.open("tests/samples/test3.png").convert(mode="RGBA")
 
         # Set-up the Generator.
         generator = Generator(5, 5, foreground=foreground, background=background)
@@ -389,7 +389,7 @@ class GeneratorTest(unittest.TestCase):
 
         # Verify that all the diffs are essentially black (i.e. no differences
         # between generated identicons and reference samples).
-        expected_extrema = ((0, 0), (0, 0), (0, 0))
+        expected_extrema = ((0, 0), (0, 0), (0, 0), (0, 0))
 
         self.assertEqual(diff1.getextrema(), expected_extrema)
         self.assertEqual(diff2.getextrema(), expected_extrema)