1. Apply a drop-shadow as in your second example. 2. Go to the blending options for the drop-shadow effect. 3. Tick the box which says: "Layer mask hides effects". [![enter image description here][1]][1] 4. You can now use selection tools to select the inner drop-shadow circle of your layer 5. With this inner drop shadow selected, you can mask it out. [![enter image description here][2]][2] 6. Invert the mask, if necessary with CTRL+i (for pc)//CMD +i (for mac?) [1]: https://i.sstatic.net/RgFYw.jpg [2]: https://i.sstatic.net/qfLLG.jpg