This paper proposes an infrared image fusion enhancement algorithm based on an improved wavelet threshold function and full-scale Retinex to address the problems of low signal-to-noise ratio, fuzzy detail, and poor clarity in existing infrared image enhancement algorithms. First, to overcome the degradation of infrared images caused by fixed-scale parameters and light scattering, a full-scale map of Retinex-scale parameters was obtained using atmospheric transmittance to improve image clarity. The input image and processed image with full-scale Retinex were used as the first and second inputs of the algorithm, respectively. Second, an improved wavelet threshold function was designed to solve the problems of artifacts and detail loss in the imagedenoising process of the traditional wavelet threshold function. The threshold function introduces a scaling factor that can be adjusted adaptively according to the number of layers after calculating the wavelet coefficient of the high-frequency subgraph of each layer. An adjustment factor was introduced and combined with an exponential function to suppress the high-frequency subgraph noise and preserve detailed information. The high- and low-frequency subgraphs of the above two inputs were then fused using wavelet image fusion to improve the texture details of the output images. The simulation results demonstrate that the proposed algorithm outperforms other comparison algorithms regarding noise reduction and detail highlighting capabilities, enhancing the visual quality of infrared images for the human eye. Finally, this algorithm was applied to enhance infrared images collected by an infrared imaging module, and the experimental results showed that the proposed method is practical.