For this tutorial you will need text with rounded edges and some sort of background image. If you would like to follow along with the example I used, you can download my file that contains these two items. (Incase you are dying to know, the font used in my example is called Harlow Solid Italic).

Download Neon Text File

When you are all set, select your top text layer in the Layers Palette, right-click it and select Blending Options. Click on the words "Inner Glow" to both fill the check box and select its options menu. Create a glow effect with similar options to what a chose (click the image to the left to see the full view). The color gradient you use is completely up to you. Make sure it begins with white on the left and ends with a darker color of your choice. I encourage you to play with the Choke and Size settings which depend a good bit on the your gradient.

Next, select the Outer Glow effect and create a dark radiant effect. (Click image for settings). For this effect the main settings you will need to adjust to your liking are Opacity, Size, and Range.

Similar to the last two steps, select the Drop Shadow effect. (Click image for settings). When choosing a color, pick one similar to the color in the middle of your glowing text. The Opacity, Spread, and Size settings should be customized to your pleasing. Also, if you want create a subtle illusion of looking up at your text, you may want to increase the Distance a good bit to around 20 or so.

Click OK to apply your layer effects. Now, it's time to add some dramatic lighting to the background. Click the background layer in the Layers Palette. Go to Filter>Render>Lighting Effects. Take a look at the settings I chose by clicking the image to the left. Click OK to apply your effect.

Presto! You've got yourself some groovy neon text. If you'd like to see my final result, click the image to the left.