Along with the need in military and industry, especially in certain tough and dynamic environment, image fusion need emphases to display in near natural color results and consider the requirements of human visual perception. The development of color image fusion algorithms are introduced and two representative near natural color image fusion methods based on visual characters are described, and our researches on this field are summarized in detail. The progress on real-time color image fusion system and our hardware researches are specified. Several main technologies are discussed particularly, such as multi-source image characteristics analysis, real-time image registration, post processing of fused image and so on. With current application situation of image fusion, the prospect of image fusion technique and system are forecasted.