Files supported by Picasa
Choose which files to see in Picasa
Select which types of files you want to see in Picasa.
Click Tools > Options (Windows) or Picasa > Preferences (Mac).
Click File Types.
Check the file types for Picasa to detect and display.
Click OK.
File types supported
Photos
.jpeg
.tif
.tiff
.bmp
.gif (not animated)
.psd (Photoshop)
.png
.tga
Movies and audio
For playback in Picasa
.mpg
.mod
.mmv
.tod
.wmv
.asf
.avi
.divx
.mov (needs Apple's QuickTime; see warning here)
.m4v
.3gp
.3g2
.mp4
.m2t
.m2ts
.mts
.mkv
For Movie Maker
.avi
.asf
.wmv
.mpg
.m2t
.mmv
.m2ts
Audio (for slideshows and Movie Maker)
.wma
.mp3
If a video file doesn't play in Windows Media Player or QuickTime, it won't play in Picasa.
RAW format images
Picasa supports RAW formats from these manufacturers:
Adobe (.DNG)
Canon (.CRW, .CR2)
Casio (.RAW)
Fuji (.RAF)
Hasselblad (.3FR)
Kodak (.DCR, .KDC)
Leica (.DNG, .RAW)
Minolta (.MRW)
Nikon (.NEF, .NRW)
Olympus (.ORF)
Panasonic (.RAW, .RW2)
Pentax (.PEF)
Ricoh (.DNG)
Samsung (.DNG)
Sigma (.X3F)
Sony (.ARW, .SRF, .SR2)
Information from the help page https://support.google.com/picasa/answer/15625?hl=en