I took a high resolution photo (or you can use a scanner) and first opened up Adobe Photoshop to get the white areas (or white space) as clean as possible. If you have a color image, then make sure the image is greyscale [Image --> Mode --> Greyscale]. You can adjust the image to improve on sharpness and contrast [Image --> Adjust --> Brightness/Contrast --> Levels]. Cleaning up the image gets you an awesome trace in Illustrator. After I cleaned up the image a bit, I saved the file as a .tiff file, which is a lot easier because it saves without a background but you can save as a .jpeg as well. Also, you can just bring the .psd file into illustrator. After opening Adobe Illustrator, I clicked on the image to select it. Then, I clicked the small box to the right of the Live Trace button called Tracing Presets and Options and scroll down to Tracing Options.
- Click "Preview", which enables you to see the effects live as you change the settings.
- Click "Ignore White", which enables the setting that the white background is not present.
- Set the Mode: Select "Black and White". Leave Raster set to No Image and Vector se.t to Tracing Results, and check "Fills"
That is about it on how I create a digital illustration. Online there are various different methods on doing this.