Open a PSD File in Illustrator

When you open a Photoshop (PSD) document in Illustrator, a dialog will offer two options: "Convert Photoshop layers to objects: Make text editable where possible," or "Flatten Photoshop layers to a single image: Preserves text appearance." Your choice depends on the level of editing you'd like to have. So, if you need to alter any layers in the Photoshop file, choose convert; if you don't need to alter the layered file, choose flatten.