Georeferencing is the name given to the process of transforming a scanned map or aerial photograph so it appears “in place” in GIS. By associating features on the scanned image with real world x and y coordinates, the software can progressively warp the image so it fits to other spatial datasets. This tutorial will explain how to georeference a raster image in ArcGIS so it can then be used as an overlay or for digitizing purposes. In this example, a historic Toronto map will be georeferenced using a dataset of city streets so we can see what existed on the site of Robarts Library before it was built. The appropriate section of the digital road network file (the green lines) now fills the screen yet the raster image of the fire insurance plan does not match in scale or orientation – it is much more zoomed in than necessary. Using the Update Georeferencing tool will store the transformation information with the raster file, which can be internal or external depending on the type of raster dataset being used (ie. for a the current raster dataset, that is a TIFF file, the transformation will be stored in what is known as a world file, with a .tfw or .tfwx extension). Note: Both functions can be accessed via the Georeferencing toolbar. For the Rectify option, another box will be displayed in which Resample Type and Data Name, Location and Format may be selected. Source.