A novel image fusion algorithm based on the lαβ space and nonaliasing contourlet transform (NACT) is proposed for multispectral and panchromatic images. The multi-spectral image is first transformed into the lαβ space. The original l component and panchromatic image are decomposed into a low frequency subband image and a set of high frequency subband images by using NACT. The low frequency subband image and high frequency subband images are then fused with different fusion rules to obtain fused coefficients. Cycle spinning (CS) is introduced to reduce shiftvariance of the transform. Finally, a fused multi-spectral image with high spatial resolution is generated by inverse non-aliasing contourlet transform and inverse lαβ transform. Simulation results show that the proposed method can provide better fusion pictures than the traditional hueintensitysaturation (HIS) transform method, wavelet fusion method and contourlet transform based method.