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To use your green screen footage in a bigger project, first edit it the following way, export it, and then import the new file. Not doing so will cause you to be unable to use cutaways, text, or transitions with your green screen footage.

To use green screen in iMovie, first start with an empty project and select the background you would like to use.

Green screen background

Drag and drop the background video or image into the timeline.

Green screen background drop

Select the green screen footage you want to use and drag and drop it above the background.

Dropping footage into background

To make the background longer or shorter to match your green screen footage, drag the edge of the background.

Dragging edge of background

Click to select the green screen footage in the timeline, then click the drop down menu that defaults to Cutaway above the left corner of the viewer window and select Green/Blue Screen.

Change cutaway to green blue screen

The green should now be removed to reveal the background behind it.

 The green should now be removed to reveal the background behind it.