CALayer with transparent hole in it

To create this effect, I found it easiest to create an entire view overlaying the screen, then subtracting portions of the screen using layers and UIBezierPaths. For a Swift implementation:

// Create a view filling the screen.
let overlay = UIView(frame: CGRectMake(0, 0, 
    UIScreen.mainScreen().bounds.width,
    UIScreen.mainScreen().bounds.height))

// Set a semi-transparent, black background.
overlay.backgroundColor = UIColor(red: 0, green: 0, blue: 0, alpha: 0.85)

// Create the initial layer from the view bounds.
let maskLayer = CAShapeLayer()
maskLayer.frame = overlay.bounds
maskLayer.fillColor = UIColor.blackColor().CGColor

// Create the frame for the circle.
let radius: CGFloat = 50.0
let rect = CGRectMake(
        CGRectGetMidX(overlay.frame) - radius,
        CGRectGetMidY(overlay.frame) - radius,
        2 * radius,
        2 * radius)

// Create the path.
let path = UIBezierPath(rect: overlay.bounds)
maskLayer.fillRule = kCAFillRuleEvenOdd

// Append the circle to the path so that it is subtracted.
path.appendPath(UIBezierPath(ovalInRect: rect))
maskLayer.path = path.CGPath

// Set the mask of the view.
overlay.layer.mask = maskLayer

// Add the view so it is visible.
self.view.addSubview(overlay)

I tested the code above, and here is the result:

I added a library to CocoaPods that abstracts away a lot of the above code and allows you to easily create overlays with rectangular/circular holes, allowing the user to interact with views behind the overlay. I used it to create this tutorial for one of our apps:

The library is called TAOverlayView, and is open source under Apache 2.0. I hope you find it useful!

Accepted solution Swift 3.0 compatible

let radius = myRect.size.width
let path = UIBezierPath(roundedRect: CGRect(x: 0.0, y: 0.0, width: self.mapView.bounds.size.width, height: self.mapView.bounds.size.height), cornerRadius: 0)
let circlePath = UIBezierPath(roundedRect: CGRect(x: 0.0, y: 0.0, width: 2.0*radius, height: 2.0*radius), cornerRadius: radius)
path.append(circlePath)
path.usesEvenOddFillRule = true

let fillLayer = CAShapeLayer()
fillLayer.path = path.cgPath
fillLayer.fillRule = kCAFillRuleEvenOdd
fillLayer.fillColor = UIColor.gray.cgColor
fillLayer.opacity = 0.5
view.layer.addSublayer(fillLayer)

I took a similar approach as animal_chin, but I'm more visual, so I set most of it up in Interface Builder using outlets and auto layout.

Here is my solution in Swift

    //shadowView is a UIView of what I want to be "solid"
    var outerPath = UIBezierPath(rect: shadowView.frame)

    //croppingView is a subview of shadowView that is laid out in interface builder using auto layout
    //croppingView is hidden.
    var circlePath = UIBezierPath(ovalInRect: croppingView.frame)
    outerPath.usesEvenOddFillRule = true
    outerPath.appendPath(circlePath)

    var maskLayer = CAShapeLayer()
    maskLayer.path = outerPath.CGPath
    maskLayer.fillRule = kCAFillRuleEvenOdd
    maskLayer.fillColor = UIColor.whiteColor().CGColor

    shadowView.layer.mask = maskLayer

I was able to solve this with Jon Steinmetz suggestion. If any one cares, here's the final solution:

int radius = myRect.size.width;
UIBezierPath *path = [UIBezierPath bezierPathWithRoundedRect:CGRectMake(0, 0, self.mapView.bounds.size.width, self.mapView.bounds.size.height) cornerRadius:0];
UIBezierPath *circlePath = [UIBezierPath bezierPathWithRoundedRect:CGRectMake(0, 0, 2.0*radius, 2.0*radius) cornerRadius:radius];
[path appendPath:circlePath];
[path setUsesEvenOddFillRule:YES];

CAShapeLayer *fillLayer = [CAShapeLayer layer];
fillLayer.path = path.CGPath;
fillLayer.fillRule = kCAFillRuleEvenOdd;
fillLayer.fillColor = [UIColor grayColor].CGColor;
fillLayer.opacity = 0.5;
[view.layer addSublayer:fillLayer];

Swift 3.x:

let radius = myRect.size.width
let path = UIBezierPath(roundedRect: CGRect(x: 0, y: 0, width: self.mapView.bounds.size.width, height: self.mapView.bounds.size.height), cornerRadius: 0)
let circlePath = UIBezierPath(roundedRect: CGRect(x: 0, y: 0, width: 2 * radius, height: 2 * radius), cornerRadius: radius)
path.append(circlePath)
path.usesEvenOddFillRule = true

let fillLayer = CAShapeLayer()
fillLayer.path = path.cgPath
fillLayer.fillRule = kCAFillRuleEvenOdd
fillLayer.fillColor = Color.background.cgColor
fillLayer.opacity = 0.5
view.layer.addSublayer(fillLayer)

Swift 4.2 & 5:

let radius: CGFloat = myRect.size.width
let path = UIBezierPath(roundedRect: CGRect(x: 0, y: 0, width: self.view.bounds.size.width, height: self.view.bounds.size.height), cornerRadius: 0)
let circlePath = UIBezierPath(roundedRect: CGRect(x: 0, y: 0, width: 2 * radius, height: 2 * radius), cornerRadius: radius)
path.append(circlePath)
path.usesEvenOddFillRule = true

let fillLayer = CAShapeLayer()
fillLayer.path = path.cgPath
fillLayer.fillRule = .evenOdd
fillLayer.fillColor = view.backgroundColor?.cgColor
fillLayer.opacity = 0.5
view.layer.addSublayer(fillLayer)