Creating Japanese Art Style Web Navigation Panel

Start by applying a nice gradient to the background in radial mode.

Create a rounded rectangle using rounded rectangle shape tool.

Double click the layer to open layer style window. Apply settings as shown.

Create a selection as shown using polygon lasso tool.

Create a new layer and fill it with black to white linear gradient.

Ctrl+Click the rounded rectangle layer thumbnail to get the selection. Press Ctrl+Shift+I to inverse the selection. Press Delete. Change the layer mode to lighten.

Duplicate both the layers several times and place below each other. Select and merge all the button layers.

Create an elliptical selection using elliptical marquee tool. Create a new layer and fill it with black color. Change the layer mode to "Soft light".

Ctrl+Click the button layer thumbnail to get the selection. Press Ctrl+Shift+I to inverse the selection. Press Delete.

Create some circle shapes using elliptical shape tool. Double click the layer to open layer style window. Apply settings as shown.

Create two vertical lines and move these lines below all the layers in layer order in layer palette.

Duplicate the merged button layer. Squeeze it horizontally. Place it left side as shown in the image below. Move this layer below the main button layer in layer order in layer palette.

Duplicate the layer and place it on the other side.

Create a tentacles shape as shown. Apply same layer style we used before. Duplicate the layer. Press Ctrl+T. Right click and select Flip Horizontal and place on the other side.

Similarly create more tentacle shapes and place as shown in the image below.