IE5/6 don't by default, but you can subvert that with a little bit of browser-aware Javascript. I'll dig out the link if it's useful to you.
What it does is attach a proprietary filter, via CSS2 DOM events, to PNGs in IE only; this changes the particular renderer used for them to one which supports alpha channels. Grotesque, innit? :)
Re: that the CSS renderer and the PNG renderer disagree
What it does is attach a proprietary filter, via CSS2 DOM events, to PNGs in IE only; this changes the particular renderer used for them to one which supports alpha channels. Grotesque, innit? :)