Before you can edit an item from My Photo Stream in iPhoto, you need to import it into your iPhoto library.
Select iCloud in the Source list and double click the My Photo Stream album.
Select the photo you want to edit and click the Edit button in the toolbar.
If the photo has already been imported into your iPhoto library, click “Show in library.” If it hasn’t been imported, click Import.
Edit the photo.
For more information, see Editing overview and its related topics.
When you edit a photo from My Photo Stream in iPhoto, the version of the photo in My Photo Stream remains unchanged from the original. To add an edited item to My Photo Stream, see Add photos to My Photo Stream in iPhoto.