Image decomposition is crucial for many image processing tasks, as it allows to extract salient features from source images. A good image decomposition method could lead to a better performance, especially in image fusion tasks. We propose a multi-level image decomposition method based on latent low-rank representation(LatLRR), which is called MDLatLRR. This decomposition method is applicable to many image processing fields. In this paper, we focus on the image fusion task. We build a novel image fusion framework based on MDLatLRR which is used to decompose source images into detail parts(salient features) and base parts. A nuclear-norm based fusion strategy is used to fuse the detail parts and the base parts are fused by an averaging strategy. Compared with other state-of-the-art fusion methods, the proposed algorithm exhibits better fusion performance in both subjective and objective evaluation.