How can I create shaded relief from contour lines (.shp format)?
I see Hillshade in ArcToolbox, but it asks for a raster file.
I have ArcGIS 10.0.
You first need to create a raster layer from your vector contour layer. You can use the Topo to Raster tool under the Spatial Analysis Tools>Interpolation toolbox (reference via vs 9.3.1 not sure if it is the same in 10). Once you have your raster layer, then you can use the Hillshade tool.
contour to terrain then terrain to raster. More control over the output pixel size.