I copied this from an Unreal tutorial, but I don't remember the link. Hope I'm not breaking any rules by posting it here! :erm:
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To begin adding a skybox, we need to go to create a separate cube in our workspace that's far removed from our level-in-progress. We want someplace that's far enough away from the level that if we add a hallway or room, we're not going to interfere with the skybox.
Using the Top viewport, move the camera to a spot where you don't plan to build anything. In our tutorial level, I aligned the camera in the top right corner, far removed from the terrain we just created. Once you have a spot picked out, subtract a cube that is 1024 x 1024 x 1024.
For the texturing, we want to choose a texture that will closely match the type of skybox we're trying to create. But, we have a decision to make first. Are we going create our sky without the use of a static mesh or do we want to take advantage of this option? I'm going to opt for the latter since static meshes easily create a seamless sky. However, later in this tutorial, I'll highlight some methods to create a skybox without a static mesh. At any rate, I textured the walls and ceiling of the skybox with textures from the SkyRenders package under the SeppukuGorgeSkies subsection. In the end, our choice of texture won't matter too much since I'm planning on using a static mesh to create the sky. Then, for the floor, I used a simple dirt texture from the ArboreaTerrain package—Sand01AR.
Next, in the Static Mesh browser, open up the AWStellarMeshes package. This package contains the two meshes we'll use for our sky. First, we want to add a star field, so highlight the Skyball mesh and add it to your skybox using the right-click menu.
You'll notice that the Skyball mesh is pretty small, so let's resize it using the DrawScale 3D options at the bottom right of your screen. DrawScale 3D can be used on any static mesh, actor, or brush in your level to scale the visuals in your level however you see fit. It also does so with little overhead on your computer since we're not creating any new polygons by scaling the mesh. So, in the text boxes, enter 4 in for all three settings. This will resize the mesh to fit in our skybox.
Now, if you zoom in in your Perspective viewport so that the camera is inside the Skyball mesh, you'll see a star field that will work perfectly for our night sky.
Now, let's add a stellar body to your night sky. Returning to the static mesh browser, highlight the MoonCard mesh and place it inside the Skyball mesh somewhere near the top. Ensure the entire mesh is visible. You also may wish to rotate the mesh a bit depending on how you want it to look in your finished skybox. That is, if you want it to appear like a rising moon, place it lower and rotate it so that it looks like a round moon as in the picture to the right—looks kinda like a picture straight from NASA.
Next, we need to inform the editor that this space will be used as our skybox. To do this, we return to the Actor Browser. Expand the Info category, then ZoneInfo, and highlight SkyZoneInfo as illustrated in the picture below.
Finally, place the SkyZoneInfo actor inside the Skyball mesh and center it directly in the middle of the Skyball mesh.
Now, we've done all we need to do for our skybox up to this point. All that is left is to tell the editor where we want the skybox to display. Back to our terrain, highlight a side of the cube where we placed our terrain and press [SHIFT] + B to highlight all sides of the cube.
Open up the Surface Properties window by right-clicking on any of the highlighted surfaces. Under the Flags tab, check the Fake Backdrop option as shown in the example to the right. This simply tells the editor that the highlighted surfaces are meant to display what the SkyZoneInfo sees.
And, that's that. To see your new skybox, right-click on the title in the Perspective viewport and go to View, then click on Show Backdrop. This will display the current skybox as it will be seen in the game. Just make sure you toggle Show Backdrop off again before you continue building or you'll have a difficult time maneuvering around in the editor as your skybox will hinder your view in the workspace. Also, if your moon appears too large for your tastes (as mine did), play around with the DrawScale options until it's sized to your liking.
It works for me. :D