1) Create a new image 400x400 px with a white background. Add a new layer(layer1) and fill with black.

2) Select the rectangle Marquee and draw your rectangle. Then switch to channels palette and fill your selection in with white.

3) Now deselect the rectangle (CTRL+D)

6) Now hold CTRL and click on "RGB" .

7) Then go back to the layers palette, Create a new layer (btn-layer) and fill the selection in with any color.Now you can hide the layer1.

8) Now select the marquee tool in the tool bar. Then holding down SHIFT key ,push the up arrow on your keyboard once, to move the selection up.

9) NowHOLD CTRL and ALT and click on btn-layer.

10) Now holding shift again press the down arrow on your keyboard once to move the selection back down.you will get something similar to the picture opposite

11) Now create a new layer (layer 2). Press D then X to reset the colors.

12) select the gradient tool and in the options set it to "foreground to transparent" .

13) Now drag the gradient from the top of the selection to the bottom.

14) OK deselect CTRL+D.

15) Now duplicate the current layer(layer2) and rotate 'layer2 copy' by 180.( Edit>Transform> Rotate 180). Now move the white highlight ('layer2 copy') to the bottom of the pill shape as shown.

16) Now set the layer blend mode of 'layer 2 copy' to "color Dodge" and turn the opacity down to 62. Then go to Filter> Blur> Gaussian Blur and enter a radius of 1.6 pixels. Click OK

17) Hold ctrl and click "btn-layer" to select it.

18) Create a new layer(layer3).

19) Now select the paint tool and create a new brush(double click on a current brush in the brushes pallet to edit its settings) with the settings shown opposite.

20) And add a small highlight to the bottom of the pill. Now turn the opacity of "layer 3" down until your button looks good and realistic.

21) Now you can add your text.