Abstract: A novel image fusion algorithm based on wavelet lifting scheme is presented. The lifting scheme is a new idea of constructing wavelets and has several unique advantages over conventional convolution-based wavelet transform. It allows for an in-place implementation of wavelet transform and reduces computation time and memory requirement greatly. So in this fusion algorithm, the lifting wavelet transform is employed to decompose and reconstruct images to realize fast image fusion. Meanwhile, a new local feature-based fusion rule is put forward to improve fusion quality and extract all significant features from multi-source images. Extensive experiments on the fusion of registered SPOT Panchromatic/multi-spectral images, multi-focus digital camera images, and medical MRI/PET images have been performed. Finally, visual judgment and several objective evaluation criterions are taken as the means of assessing fusion performance. The experimental results show that the new approach is very effective and is able to fuse multi-source images.