How to make material from image w/ transparency (lots of multicolored lines?)

So I am importing this image from Photoshop with a transparent background, and import it into UE4 OK, but when I create a material from the texture (I want to add it to a BSP face), the transparent background turns into a lot of colorful horizontal lines. And I have no idea why. When I view the texture, the BG is transparent.
The texture is a 512x512 PNG file. Ive tried to import as JPG/JPEG and TGA, but the background turns completely white, and the material background is also white. How do I get my material to work with the transparent portion of the image correctly? Note: The lines also appear n the material and the material thumbnail n the content browser.

Photoshop export:


Unreal Engine texture, from which the material s created

When applied to BSP as material:



You need to set the blend mode in a material as Translucent or Masked. And connect the alpha output to the Opacity or Opacity Mask.

This works brilliantly … thanks!