Do you mean like designing your own sprite? I know SCRATCH allows you to paint and create your own sprites; are you talking about something else other than the paintbrush icon button that is underneath the stage?

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Any image editor can be used. Just save the file as a PNG or JPEG or GIF and then import them into Scratch.
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You can also try using The GIMP, which is also free. http://www.gimp.org/
Its interface is similar to Photoshop, and it's what I use to create and edit sprites.

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