How to preserve png transparency?

Maybe try changing pixel format form PixelFormat.Format24bppRgb to PixelFormat.Format32bppRgb. You need the extra 8 bits to hold the alpha channel.

Using PixelFormat.Format32bppRgb didn't work for me. What worked however is using oldImage.PixelFormat when drawing the new image. So the corresponding line of code becomes:

using (Bitmap newImage = new Bitmap(newSize.Width, newSize.Height, oldImage.PixelFormat))