How do I make jpeg image background transparent?

[perspective]

jpeg will never have Transparent, that is the nature of a jpeg file. If you wish to have a Transparent background you have to use a png file for the web. The problem that you have is you are using a Vector program (Illustrator) with a Pixel program (Photoshop).

When working with a vector program it's saved as a postscript file such as eps or pdf and therefore is resolution independent. You can export from Illustrator as a jpeg but it becomes a pixel file or Photoshop file.

You are working back to front.

You need to finish your vector work (Illustrator) and send it to Photoshop to complete the work. That way you can take out the background and create whatever you wish.

Illustrator is not for web work it's for Print and can be saved as eps or pdf. Photoshop is for both Web and Print, the only difference here is resolution.

[handrawn]

it is now over 6 years since nutmeg asked the question so it is to be hoped that a workflow has been established by now

as it happens there are some very good reasons for bringing raster art into a vector app, but maybe you need to be a [vector] designer to appreciate this...

[perspective]

People are still answering the question in 2012 and new young designers need to know the answers and no one had given a correct answer. And yes, you may have good reason to bring raster art into a vector program as I am a vector designer, but the end result will be a raster file in all cases. Jah Rastafari.

[steve.ledger]

.. no one had given a correct answer.

I see lot's of correct answers to the OPs question in post#1
What was your answer to "How do I make jpeg image background transparent?", exactly?

[perspective]

Nutmeg states 'I would like to bring this image (a jepeg image with white background) into illustrator to incorporate with my drawing. Is it possible to make the white background of the jpeg image to be transparent so that the drawing done in illustrator shows through the white background area only'

My answer was - You are working back to front. Jpeg will not go into illustrator without the white background and clipping will not change that!

Please show me one correct answer.

[steve.ledger]

The point is, you can knock out the background from this JPEG in several ways as mentioned earlier before bringing it into Illy or simply do it all in Illy.
As the OP asked "Anyone know how I could do that either with Photoshop or Illustrator?" then either method is a valid answer for him/her.

You can try to tell us all that we're all doing it wrong, working back-to-front, inside out or upside down (in my case as I'm in Australia) and that there's just "one correct answer" by which time we've all finished the task while you're still talking

[perspective]

Thank you for that, I am happy you have at last shown how it's done! I am sorry to have wrote a load of c**p but you are the only one that have showed a lot of us just what is needed. And I think a lot of new Illustrator and Photoshop artists will learn from your work. Now I am done!