As already mentioned, one method for achieving the appearance of transparent or translucent textures is by using texture blending. You can also use alpha channels and the D3DRENDERSTATE_BLENDENABLE render state (from the D3DRENDERSTATETYPE enumerated type).
A more straightforward approach to achieving transparency or translucency is to use the DirectDraw support for color keys. Color keys are colors or ranges of colors that can be part of either the source or destination of a blit or overlay operation. You can specify whether these colors should always or never be overwritten.
For more information about DirectDraw support for color keys, see Color Keying in the DirectDraw documentation.