Create a new layer between the Background layer and the Outline layer. This layer will be for the skin (well, you can color whatever you like first, but I usually start off with the skin or hair). :) Most people use the magic wand tool to select an area to paint, but I have found the magic wand tool to be insufficient, and not very precise. Plus, you end up having several white areas around the lines that need to be filled in. Instead, try using the polygonal lasso tool to select the areas that you want to color in. It takes a little longer, but works out best in the long run, in my opinion. You don't have to worry about holes in the outline or those annoying white areas around the lines. What you want to do is trace along the outlines of the region you are wanting to color. This can be difficult on larger complex regions, though, since once you start the selection you can't stop until you finish it. If this becomes a problem, the pen tool will work just as well for this task. Sometimes complicated regions like detailed hair can be a pain to select, but trust me, just be patient and you will be glad you took the extra time instead of using the magic wand tool. :)

Once you have all of the skin (or whatever other part you are working on) selected, choose a color and use the paint bucket to fill it in. If you have problems choosing colors, look around on the internet for pictures of characters with nice skin tones, and copy them over using hte eyedropper tool. If the color is too faded because you took it from a bad scan, just adjust it until it looks the way you want it. Also, before you add the color, consider what kind of lighting will be in the picture. Will it be in normal daylight, or will it be dark? What kind of mood do you want your picture to have? The colors you choose will affect the overall feel of the picture, so take this into account before you begin to add color.

Next, select the other regions of the picture and fill in the colors. Make sure to put each color on a separate layer, or at least make sure you do not have any two colors touching one another. This will make it much easier to shade later on. ^_^ Speaking of which, do not begin to shade until you have filled in the colors for all the major areas. This is done so you can make sure the colors match up well. It's annoying if you shade in the hair first, but then decide that you want the alter the color drastically because of the colors you choose for the clothing or background.

I wanted this picture to have soft light, so I chose light, slightly faded colors. Remember that your color selection can greatly affect the look and feel of your picture, so take some time when filling in all the colors. I usually spend some time adjusting and readjusting the colors of the skin, hair and clothing until I'm pleased with the combination.

Now that all the main colors are filled in, we can go back and start shading. I usually start with the skin and hair, just because I think they're more fun. :) Make sure that you check the preserve transparency box at the top of the Layers floating menu! This is very important; it allows you to paint over the area that you already painted on without going over the lines. It will make shading much easier. Select a darker version of the base color of the layer you are working with. If you have trouble selecting a nice color, then look at other pictures for reference. I almost always use another anime picture to help me with the shading, especially with more complicated light patterns. I use a graphics tablet when shading, but a lot of people have to use a mouse instead. To get that smooth cel look with a mouse, you can use the freehand pen tool to define the shadows, color them freehand (which I often prefer, even though its messy and takes longer..), or use the polygonal lasso tool to select the areas you want to shade. There are a variety of ways you can go about adding the shading; what method you choose is up to you. Just remember to experiment, and to be patient, because it can take a while to get the shadows smooth and shaped the way you want them.

It's usually a good idea to add several layers of shading per base color, especially on areas like the skin and hair. In addition to adding another layer of shadows, I adjusted the colors of the skin a little to make them less dull. To do this, use the eyedropper tool to select the color you want to change, then go to Replace Color on the top Image Menu. You can then change that color to anything you like without messing up the shading you have already filled in. ^_^

Once you have finished shading the face, move onto another area. I chose to do the hair next, because as I mentioned before, I like coloring hair. :) The hair was colored pretty much the same way as the face; I picked a darker shade of the base color, and filled in the shadows. Make sure that you keep a consistent light pattern. For example, if the light is coming from the left on the face, make sure it looks like its coming from the left on the rest of the picture. Pay close attention to areas where the shadows fall, and make sure to shade them accordingly. Again, it never hurts to use another picture as reference.

If you like, add a second layer of shadows to the hair to give it added depth. Feel free to add highlights, too. I didn't add them in this particular picture, because I didn't feel that his hair needed it, but if you were to add highlights, I recommend putting it on a separate layer above the hair. Making the light areas of the highlights overlap the darker shadows is a great way to make the hair (or anything) look really shiny, and its easier to make them overlap if they are on separate layers. That way, if you mess up, you don't ruin the existing shading. ;)