Automatically hide files with certain extension in Windows

You can create a program (possibly running as a service) that will monitor changes in a given directory. Then, whenever it recognizes a change, it can decide whether to make that file hidden or not. See Obtaining Directory Change Notifications.

Making a file hidden is quite simple - just use SetFileAttribute.

Hiding a file is not the property of OS. Its the properties of the file which makes it visible or hidden and I don't think windows support hiding files by extension. But you can write your own program which will take the extension and then it will apply

 "attrib +h *.<ur_extension>" 

on the folder and it will hide all the files of that extension. You can create a simple vb script and then execute it after the previous program has ended.