Seems like I have had so many people ask how to do a dotted line in Photoshop, so here is the easiest way, using custom brushes.

Step1:
Open the brushes Pallete by selecting a brush. (B)

Ctrl/Cmd click on a brush to open the modifier window.

(Open Brushes Palette in CS and CS2)

Step2:
This is the modifier window.


Click the new brush button, so we are modiftying a copy and not the original.

Step3:
Set the spacing for 150% - More to increase the gap between dots

(Photoshop CS and CS2, Click on the brush Tip shape option)

Step4:
To draw a straight line: Click your mouse anywhere, Hold shift and click again. It will connect the dots, with a nice dotted line.

 

Step5:
Here is a little example of what is possible with dotted lines.

I created a background and renamed it layer 1. Added a new layer on top and made some dotted lines.
Then I loaded the selection, selected layer 1, turned off layer 2 and hit delete.
Then I added a white background and a drop shadow for effect.

Tutorial Source