IMAGE FUSION is 'the combination of two or more different images to form a fused image by using a fusion algorithm'. In this paper, an algorithm is designed in which extracts the pixels from the stacked images. Principal component analysis is carried out which aims at reducing a large set of variables to a small set that still containing most of the information that was available in the large set. The technique of principal component analysis enables us to create and use a reduced set of variables, which are called principal factors. A reduced set is much easier to analyze and interpret. In this paper, fusion of images obtained from a visible camera and that from an infrared camera is been done.