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In this paper, we propose a novel method for image fusion from a high resolution panchromatic image and a low resolution multispectral image at the same geographical location. Different from previous methods, we do not make any assumption about the upsampled multispectral image, but only assume that the fused image after downsampling should be close to the original multispectral image. This is a severely ill-posed problem and a dynamic gradient sparsity penalty is thus proposed for regularization. Incorporating the intra- correlations of different bands, this penalty can effectively exploit the prior information (e.g. sharp boundaries) from the panchromatic image. A new convex optimization algorithm is proposed to efficiently solve this problem. Extensive experiments on four multispectral datasets demonstrate that the proposed method significantly outperforms the state-of-the-arts in terms of both spatial and spectral qualities.

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