I'm new to QGIS.
How can I combine multiple raster layers into one layer?
The raster images are of different areas with very little overlap.
The goal is to bring numerous town plats into one project.
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Similar to the merge function is building a virtual raster:
Raster-> Miscellaneous-> Build Virtual Raster (Catalog)
This leverages the GDAL Virtual format (.vrt), which is an XML file that defines how the files are positioned, etc. Virtual rasters can save considerable disk space, and QGIS 'sees' them as a single file. This is very useful for rasters that do not need blended together to create a new image file, i.e. just connected together in a mosaic. Many options beyond the GUI tool exist, if you use the underlying GDAL command line gdalbuilvrt utility.
A .vrt can be quite large. To increase the speed of rendering in QGIS, you can create an external overviews 'sidecar' file.
Raster-> Miscellaneous-> Build overviews (Pyramids)
When using this tool with a .vrt, or with a merged file, I opt for external TIFFs with slight to no JPEG compression, which will create a file with the .ovr extension. The tool leverages GDAL's gdaladdo utility and provides fairly complete coverage of its options.
You may want to read both GDAL utility pages to fully understand what the GUI tools are doing and how you might want to override the options (by clicking the pencil and directly editing the command).
Also, Linfiniti's blog has some useful tidbits on building mosaics, setting options in the Raster tools and raster compression:
Use the merge tool:
This essentially does the same thing as the GDAL utility gdal_merge; which is another alternative approach using the command line (or run as a sub-process under Python). BTW I'm using QGIS 1.9.90-Alpha, but this tool has been around for a while so I presume that it is available under 1.7x.