Is there a way to make the canvas follow the shape of the image with photoshop?

No, not sure why you would want that anyway.

thanks for the quick reply. are there any software to be able to do this?

What are you trying to achieve?

basically if I create a circular image, I want the canvas to be circular following the shape, instead of it being rectangular.

Well if you save it as a .png the background will be transparent, essentially achieving the same effect.

I know, but the transparent background is still rectangular, that shape is what I want to change. I've googled and haven't found an answer as of yet. Was seeing if I could get any answers here.

What are you using it for?
Browsers work in tables, so every image/piece of text is delegated a box. Not possible to have something like that in HTML/CSS layouts.
I think it's achievable in flash though.

As an image I do not Think its possible.
But as sicklad said, css is an option for websites.

Just brush a hard round brush and clip mask every layer to it