In order to optimize the accuracy of imaging in Gamma Knife radiosurgery using the image fusion options available in the Leksell gamma plan. Phantom images from 1.5 Tesla MRI Scan (Magnetom vision - Siemens) and Computed Tomography images from Philips Brilliance 16 CT scanner were used for image fusion in Gammaplan treatment planning system. The images were fused using co-registration technique using multiview and imagemerge modules. Stereotactic coordinates were then calculated for known targets. Vector distances from the centre of the Leksell coordinate system to five known targets were measured in CT, MR and CT-MR fused images and compared with geometrical measurements. The mean values of maximum absolute errors were 0.34 mm, 0.41 mm.0.38 mm (along x-axis), 0.43 mm, 1.53 mm, 0.62 mm (along y-axis) and 0.75 mm 2.02 mm, 0.93 mm (along z-axis) for CT, MR and CT-MR fused image data respectively. The mean error in calculating the vector distances from the center of the Leksell coordinate system (100, 100, 100) to the known target volumes are 0.22 mm, 0.8 mm and 0.43 mm for CT, MR and CT-MR fused images, respectively. Image fusion functions available in gamma plan are useful for combining the features of CT and MR imaging modalities. These methods are highly useful in clinical situations where the error associated with Magnetic Resonance Imaging is beyond acceptable levels.