Step One

Open a grayscale image that you want to colorize. since the image is in grayscale mode, you will need to change it. To do so, go to Image>Mode>RGB to set the image into RGB mode.

Step Two

Using any selection tools, select the area that you want to colorize. In this case, I used Lasso Tool.

Step Three

After you selecting the area you want to colorize, go to Image>Adjust/Saturation (Ctrl+U) and when the dialog box appear, make sure that Colorize box is checked. Now play around with the Hue Slider to choose your color. Do the same thing to colorize the rest of the part of the image.

And here is what I came up with after color the black and white image. Isn't it looks cool. Argh, black and white pictures are ugly!