I spent hours trying to figure out why the alpha channelled textured models we imported in the level editor, show white backgrounds. I tried a couple of things but no luck.

I created my model in Maya, and added a material to it, with an alpha channel texture. It looked the way it should. Then I exported the file as FBX, and imported it into the level editor, in here, it shows with a white background.

Because my previous attempts did not help I ask: What has to be done to enable alpha channel (transparent backgrounds) in a model.

Has the Model the Flag "32 Bit" + "Alpha" set? Maybe show a Picture to complain your Problem a way better...

cYa Sebastian

Barring anything else, what you could do is use a DDS texture with an alpha channel (there's an NVIDIA plugin for Photoshop for exactly this purpose). It's worked every time for me for translucent model areas, especially when I was creating a door with a small glass pane inside it.