NOTE: On iOS devices, tilt-shift was included as of V1.14 and works on devices running iOS 4.2.1 or later. On Android devices, tilt-shift was included as of V1.1.0 and works on selective supported devices.
To use tilt-shift:
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Take a photo or choose a photo saved on your device. [iOS can also utilize tilt-shift in live-view, as seen on the left below. Android can only utilize tilt-shift once a photo has been taken or imported, as seen on the right below.]

iOS Android -
Select the drop icon from the top menu bar (see screenshots below).

iOS Android - Choose linear ( – ) or radial ( o ) tilt shift.
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Drag or tap the double lines (linear) or circle (radial) to the desired section of the photo. Anything you see in the translucent white will then become blurred once you remove your finger from the screen.
- To remove the tilt shift effect simply navigate to the drop icon and select the X.
You can find tips for using tilt-shift in this article from maclife.com, as well our Photo Tips post at blog.instagram.com.