You need to make sure that you are working with the right resolution. If you are working with a low-res image, there isn't anything you can do about pixelation.
So you need to start with an image that is set to 300 dpi. If you are working with an image yougot off the Internet, or something taken with a low MP camera (such as a cell phone camera) or a camera with the quality settings set too low, you are going to be working with a low res image.
Go to Image>Image size to see what your resolution is.