The two image sizes used by the game are: (Jpeg files are supported as well, but given the opportunity prefer the higher quality PNGs)
You can save images in this format using practically any image editor such as, Adobe Photoshop or GIMP. In Pillars of Eternity, there are two separate PNG files for any given portrait, implementing the different image sizes used by the game. Once you have the right files in the right folder, all you have to do is select the portrait inside the game. To add additional portraits into the game you can either download or create your own portraits. Players choose a portrait for their character at Character Creation, from a variety of unique portraits. The portrait is a small, drawing of a character's face, used for the Player character and other members of his party.