From the novel viewpoint of information theory， the idea to apply information fusion theory to dynamic state estimation in power systems is proposed. After a brief introduction to the contents and characteristics of the information fusion theory， the applications of this theory are fully discussed in fields such as wide area measurement system（WAMS）， distributed system， measurements under sudden changes and joint estimation of the states and parameters. The characteristics and advantages of these applications are developed thoroughly. A scheme of joint states and parameters estimation based on information fusion theory is given.