I have an Illustrator document with a number of images embedded. The images are all illustrations on a white background. I need to remove the white so that the art behind shows through. I know there are a variety of ways to do this in Photoshop, but is there a way to do it in Illustrator?
You can draw a path around the portion of the image you wish to remain visible, then select the image and your path and choose Object > Clipping Mask > Make.
Essentially, you simply create a masking shape the same as you would in Photoshop.
Also you can try to trace copy of your image with b/w threshold and then use traced shape as mask.
Right way to deal with transparancy is to use the format that supports it. Like PSD or PNG.