Hi Jamie
This is a simple job for layer masks. A mask allows you to selectively show or hide a layer - think of it like a stencil you place over your layer, but instead of seeing the stencil where it obscures the image, the stencil provides transparency. You can have partial transparency using a gradient mask, and by overlaying a gradient masked image over another image you can create a cross-fade.
Here's a tutorial for exactly that:
http://articles.sitepoint.com/article/photoshop-fade-layer-maskShould see you right.
HTH