From Valve Developer Community
VTFEdit is a GUI frontend for the functions contained within VTFLib, an LGPL open source programming library. VTFEdit is a successor to VTFTool and is written by Neil "Jed" Jedrzejewski and Ryan "Nemesis" Gregg.
VTFEdit itself was written solely by Ryan and is a .NET based GUI tool for the creation and conversion of VTF and VMT files. It is a powerful tool allowing files of various formats to be converted to/from VTF format in all of the Source texture formats.
Other features include the ability to create normal maps from grey scale images, various sharpening filters for MIP Map generation, access to all VTF header flags, a simple tree based VMT creation system with GCF access, a WAD conversion tool, a batch conversion tool and a VMT creation wizard.