Sometimes you might find that you want to have text cut out of a shape, rather than placed on top of it. This allows for the colors and/or patterns on the layer behind the shape to show through the letters. You have a two options for doing this in Illustrator…both of which are quick and easy.
First, create you shape. I am using a plain black rectangle as seen below.
Next, place your text on top of your shape.
Once you have it positioned where you want to cut it out, with the text selected, create outlines of the text by going to the Type menu and choosing Create Outlines. The text will no longer be editable once you do this – so be sure it reads correctly.
Now you have two options on how to proceed in cutting or knocking the text out.
With both the outlined text and the shape selected, go to your Pathfinder palette and click on the Divide icon. This will divide the overlapping areas into separate shapes. Then select any of the letter shapes and delete. this will remove the overlapping area and leave a “hole” through the shape.
Delete all of the divided letter shapes, and you are left with your orginal shape with “holes” where all of the letters used to be.
With both the outlined text and the shape selected, go to your Shape menu and make a Compound Path. This will make the two shapes into a single shape, leaving any overlapping areas as negative space.
Now you can take your shape with cutouts and place it on top of other layers and what is behind it will show through!