I found a tutorial for this effect on Sixrevisions for Photoshop. And since it was a beginners level tutorial -- it wouldn't be too hard to "port" it to Gimp.

So the credits go to the guy who wrote the tutorial on Sixrevisions.

I've also posted this tutorial on my weblog.

Notes:

• I'm using the development version of Gimp (2.7) so some things can look a bit different.
• Select > Invert means that you have to go the the Select menu and click Invert.
• Original tutorial: How to Create Inset Typography in Photoshop.

Step 1

Make a new image and draw a linear gradient (color codes: #016edf, #024f80).


(Click for larger version)

Step 2

Make a new text layer and put this in the center of the canvas. It's best to use a big or bold font.

Then make three new layers called: 'Text highlight', 'Text inner-shadow' and 'Text background'.


(Click for larger version)

Step 3

Now select the text layer and do Text to selection. Then select the Text background layer and fill the background with a gradient, a darker one than the background.

Don't delete/undo the selection. We need it for the next step.


(Click for larger version)

Step 4

Select Text highlight, make the selection one pixel smaller (with Select > Shrink) and invert the selection with Ctrl+i or Select > Invert. Now fill the Text highlight layer with a white color. After you've done that you invert the selection again, make it one pixel bigger (with Select > Grow), invert the selection again and press delete or Edit > Clear.

You can clear the selection with Select > None or Ctrl+Shift+A.

You'll get something like you see in the following image. We don't use Select > Border, because it won't look that good.


(Click for larger version)

Step 5

Select the text layer again and do Text to selection. Now select the Text inner-shadow layer, make the selection two pixels
smaller, invert it and fill it with a black color.

Now invert the selection again, make it 2 pixels bigger, invert it again and press delete or Edit > Clear. You should have a black border now that's behind the white border.


(Click for larger version)

Invert the selection again (yes... again...), open the Gaussian Blur dialog (Filters > Blur > Gaussian Blur) and apply the settings you see in the following image.


(Click for larger version)

You can clear the selection now.

Step 6

Select the Text highlight layer and apply Gaussian Blur on it with the blur radius set to one. Then move the layer below the Text background layer and move it one pixel the the right and one pixel to the bottom.


(Click for larger version)

Select the Text inner-shadow layer and move it one pixel the the right and one pixel to the bottom.

Now select the text layer again and do Text to selection, select the the Text inner-shadow layer again, invert the selection and press delete or Edit > Clear.


(Click for larger version)

Step 7

Now we have to fine-tune it to make it look good. You can copy some layer, adjust the opacity settings, add some highlights or patterns (hint: layer masks are useful for this).


(Click for larger version)


(Click for larger version)

That really looks nice. It looks like the text is pushed down into the background. Nice tutorial.

Really cool effect here, looks like the text used in Adobe software icons. Thanks for the tutorial. =)

Here's my attempt at it. I didn't know quite what to do in Step 7. Lowering the opacity of the highlight and inner shadow just a little seemed to make it look better. I did a texture overlay over the background.

LOL, there's a lot of selection inversions going on in there but they do the job!

One thing, I didn't know I had to hide the text layer and I couldn't see any of the effects until it dawned on me to do that. No prob, I got there.

This would be a nice Halloween effect for spooky tombstones.