A new fusion method based on bilateral pyramid for multispectral and panchromatic images is presented. The fused image is obtained by two different rules: substitutive and additive methods. Bilateral pyramid is a multiscale decomposition method which decomposes an input image into a base layer representing the low frequency content and several detail layers representing the high frequency part of the image. In substitutive method, both MS and PAN images are decomposed using bilateral pyramid. The detail layers of the PAN image are added to the base layer of the MS image. In additive method, the detail layers of the PAN image are directly added to the MS image. The proposed method is compared with the widely used IHS (intensity-hue-saturation), ATWT substitutive and ATWT additive fusion methods. The resulting images as well as evaluation metrics demonstrate that the proposed algorithm has better performance.