Let's get started.

Step 1: Duplicate The Background Layer

The first thing we're going to do is duplicate our Background layer. We can see in the Layers palette that we only have one layer at the moment, which is the Background layer, and it contains our original image:

Photoshop's Layers palette showing the original image on the Background layer.

We're going to duplicate it, and for that, we can use the keyboard shortcut Ctrl+J (Win) / Command+J (Mac). We now have a copy of the layer above the Background layer which Photoshop has named "Layer 1":

The Layers palette now shows the duplicate of the Background layer, named "Layer 1", above the original.

Step 2: Desaturate The New Layer

We're going to quickly remove the colors from our new layer to create a black and white version of the image. To do that, use the keyboard shortcut Shift+Ctrl+U (Win) / Shift+Command+U (Mac). The image will now appear in black and white in the Document Window:

After desaturating "Layer 1", the image appears black and white.

Step 3: Duplicate The Desaturated Layer

With "Layer 1" selected in the Layers palette, press Ctrl+J (Win) / Command+J (Mac) to duplicate it, so we'll now have two black and white layers in the Layers palette:

We now have three layers in the Layers palette.

Step 4: Change The Blend Mode Of The New Layer To 'Screen' And Lower The Opacity To 50%
With "Layer 1 copy" selected, go up to the layer blend mode options in the top left of the Layers palette. We're going to change the blend mode of this layer from "Normal" to "Screen" so that the image appears lighter. To do that, click on the down-pointing arrow to the right of the word "Normal" and select Screen from the list:

Change the blend mode of the top layer from "Normal" to "Screen" to lighten it.

Once you've changed the blend mode, move over to the Opacity option in the top right of the Layers palette and lower the opacity of the layer to 50% to reduce the brightness:

Lower the opacity of the layer to 50% after changing its blend mode to reduce the brightness.

Here's my image after changing the blend mode to "Screen" and lowering the opacity:

The image after changing the blend mode and lowering the opacity.

Step 5: Duplicate The Original Background Layer And Move It To The Top Of The Layers Palette
Click back on the original Background layer (the bottom layer) in the Layers palette to select it. Then press Ctrl+J (Win) /Command+J (Mac) to create another copy of it, which will appear directly above it. This time, Photoshop has named the new layer "Background copy":

Click on the Background layer to select it, then press "Ctrl+J" (Win) / "Command+J" (Mac) to make another copy of it.

Currently, the new "Background copy" layer is below the two black and white layers, but we need it to be above them. Moving the layer is easy. Just use the keyboard shortcut Shift+Ctrl+] / Shift+Command+] to quickly jump the layer to the top of the layer stack:

With the "Background copy" layer selected, press "Shift+Ctrl+]" (Win) / "Shift+Command+]" (Mac) to jump the layer to the top of the Layers palette.

Step 6: Change The Layer's Blend Mode To Either "Overlay" Or "Color Burn"
With the "Background copy" layer still selected at the top of the Layers palette, go back to the layer blend mode options and change it's blend mode to either Overlay or Color Burn. Depending on the image you're using, one of these two blend modes will make the image look either too bright or too dark, so use the one that looks best. I'm using "Overlay" for my image, since "Color Burn" makes it too dark:

Change the blend mode of the 'Background copy' layer to either "Overlay" or "Color Burn" depending on your image.

You may find, after changing the blend mode, that the color in your image is now too strong, so lower the opacity of the layer a little to reduce some of the color saturation if needed. I'm going to lower mine to about 75%:

Change the blend mode of the 'Background copy' layer to either "Overlay" or "Color Burn" depending on your image.

Again, it will depend on your image and what you think looks best. Here's my image at this point:

The image after changing the blend mode to "Overlay" and lowering the opacity to 75%.

Step 7: Merge All Layers Onto A New Layer At The Top Of The Layers Palette
With the "Background copy" layer still selected, press Shift+Ctrl+Alt+E (Win) / Shift+Command+Option+E (Mac) to merge all the layers onto a brand new layer at the top of the Layers palette, which Photoshop has named "Layer 2":

Merge all the layers onto a new layer at the top of the Layers palette.

Step 8: Add Noise To The Merged Layer

With the merged layer selected, go up to the Filter menu at the top of the screen, select Noise, and then select Add Noise. This brings up Photoshop's "Add Noise" filter dialog box:

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Go to Filter > Noise > Add Noise to bring up the "Add Noise" dialog box.

When the dialog box appears, enter an Amount value of somewhere between 2-5% depending on the resolution of your image. I'm using a low resolution image for this tutorial, so I've set mine to 2%. If you're using a higher resolution image, which you probably are, set it closer to 5%. Set the Distribution option to Gaussian, and make sure the Monochromatic option at the bottom is checked so we don't end up with color noise. Click OK to apply the noise and exit out of the dialog box. Here's my image after applying noise:

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The image after applying noise.

Step 9: Sharpen The Image To Enhance The Noise

Normally when working on images in Photoshop, we do everything we can to reduce or remove noise, but for this effect, we want to enhance it, and we can do that by sharpening the image. Go up to the Filter menu once again, this time choose Sharpen and then choose Smart Sharpen. This brings up the "Smart Sharpen" dialog box:

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Go to Filter > Sharpen > Smart Sharpen to sharpen the image and enhance the noise.

When the dialog box appears, enter an Amount value of somewhere around 55-60%, a Radius value of 1 pixel, set the Removeoption to Lens Blur, and finally, make sure More Accurate is checked at the bottom. Then click OK to exit out of the dialog box and apply the sharpening. If you're using a version of Photoshop prior to CS2, you can use the "Unsharp Mask" filter instead by going up to the Filter menu, choosing Sharpen, and then choosing Unsharp Mask. Enter an Amount value of around 150%, a Radius value of 1 pixel and aThreshold value of 0. Here's my image after applying the sharpening using Smart Sharpen:

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The image after sharpening and enhancing the noise.

Step 10: Add A "Curves" Adjustment Layer And Set Its Blend Mode To "Multiply"
The main effect is finished at this point, but we're just going to darken the edges a bit to enhance it even further. Click on the New Adjustment Layer icon at the bottom of the Layers palette:

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With "Layer 2" selected at the top of the Layers palette, click the "New Adjustment Layer" icon at the bottom.

Then select Curves from the list:

Select "Curves" from the list of Photoshop's Adjustment Layers.

When the Curves dialog box appears, simply click OK to exit out of it. We don't need to make any changes. All we need is the Curves adjustment layer itself in the Layers palette, which we're going to use to darken the image. To do that, go up to the blend mode options at the top of the Layers palette once again and change the blend mode for the Curves layer from "Normal" to Multiply:
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Change the blend mode of the Curves adjustment layer to "Multiply".

As soon as you change the blend mode, your image will appear darker:

Changing the blend mode of the Curves layer to "Multiply" causes the image to darken.
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Step 11: Drag Out A Large Oval Selection Inside The Image
Grab the Elliptical Marquee tool from the Tools palette (it's hiding behind the Rectangular Marquee tool by default) and drag out a large oval selection inside the document, making it so large that the edges extend out past the left and right of the image:

Use the Elliptical Marquee tool to drag out a large oval selection, extending it out beyond the left and right sides of the image.

Step 12: Fill The Selection With Black On The Curve Adjustment's Layer Mask
With the Curves adjustment layer still selected, press D on your keyboard to reset your Foreground and Background colors. Normally this would result in your Foreground color being black and your Background color being white, but because the layer mask on the Curves adjustment layer is currently selected (you can see that it has a highlight border
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around it to indicate that it's selected), we get the exact opposite. White becomes your Foreground color and black becomes your Background color whenever you reset your colors with a layer mask selected. So with black as your Background color and the Curves adjustment layer selected in the Layers palette, use the keyboard shortcutCtrl+Backspace (Win) / Command+Delete (Mac) to fill the selection with black. You're not covering the image itself with black. Instead, you're filling the area on the Curve adjustment's layer mask with black, which will cause the Curves adjustment to be hidden inside the area you selected, allowing the original lighter version of the image below it to show through. Only the corners of the image remain darker:

After filling the selection with black on the Curve adjustment's layer mask, only the corner edges remain darker.

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Step 13: Soften The Edges With The "Gaussian Blur" Filter
All that's left to do now is to soften the transition between the lighter image in the center and the darker edges in the corners, and we can do that with the "Gaussian Blur" filter. Go up to the Filter menu, choose Blur, and then choose Gaussian Blur to bring up the Gaussian Blur dialog box:

Go to Filter > Blur > Gaussian Blur to bring up Photoshop's "Gaussian Blur" filter.

As I mentioned, I'm using a low resolution image for this tutorial, so for me, a Radius value of about 50 pixels blurs the edges out nicely. If you're using a high resolution image, you'll probably want to use a setting of 150 pixels or higher. The idea is simply to blur out the edges so they transition nicely from darker in the corners to lighter as you move towards the center of the image. Keep an eye on the image itself to see a preview of the blurring effect as you're dragging the slider bar at the bottom.
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When you're happy with the blur amount, click OK to exit out of the Gaussian Blur dialog box, and you're done! Here once again is my original image:

The original image.

And here is the finished "extreme contrast" effect:

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The final result.

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