The image we will start with:

First of all, you can use the filter by going to Filter > Distort > Displace. a screen will come up asking you for settings. For the start of the tutorial, I will be using the standard settings, which are horizontal scale: 10, vertical scale: 10, Stretch to Fit and Repeat Edge Pixels:

After picking these settings, you have to select a PSD file to displace it with.

I’m going to create a pretty soft image with a few randomly drawn lines, after which I will use the Displace filter. This image has little texture and there’s not much going on.

I will apply the Displace filter (Filter > Distort > Displace, standard settings) with this file:

You can clearly see the lines drawn into this file. It already looks kind of twirly, which we can use for some nice textures. To test some more, I drew the following image and smudged it a bit:

My result after displacing our Lara Croft:

Now if you change the standard settings to Tile and Wrap around, the result will not vary much:

Lets add a little bit more detail to the PSD we’re displacing with, I randomly brushed, smudged, sharpened, blurred and so forth to create this image:

Now after displacing with the standard settings:

Not good enough, need more detail! Experiment with settings, this is what I’ve done:

my result:

Now this is something I’m going to work with. You can use this effect to create a background or texture that matches a good looking render, however it does not really remind people of the original image. For example, if you smudge this background, this is what you might get:

With some (admittingly poor) coloring and transforming:

Well, we now used the displace filter and some smudging to create our background. You can continue to do whatever with it, make a signature, a texture, and so forth. A possible example could be this poorly made (sorry, sleepy!) signature: