With the rapid advancement of information technology, digital images such as medical images, grayscale images, and color images are widely used, stored, and transmitted. Therefore, protecting this type of information is a critical challenge. Meanwhile, quaternions enable image encryption algorithm (IEA) to be more secure by providing a higher-dimensional mathematical system. Therefore, considering the importance of IEA and quaternions, this paper explores the global exponential synchronization (GES) problem for a class of quaternion-valued neural networks (QVNNs) with discrete time-varying delays. By using Hamilton’s multiplication rules, we first decompose the original QVNNs into equivalent four real-valued neural networks (RVNNs), which avoids non-commutativity difficulties of quaternions. This decomposition method allows the original QVNNs to be studied using their equivalent RVNNs. Then, by utilizing Lyapunov functions and the matrix measure method (MMM), some new sufficient conditions for GES of QVNNs under designed control are derived. In addition, the original QVNNs are examined using the non-decomposition method, and corresponding GES criteria are derived. Furthermore, this paper presents novel results and new insights into GES of QVNNs. Finally, two numerical verifications with simulation results are given to verify the feasibility of the obtained criteria. Based on the considered master–slave QVNNs, a new IEA for color images Mandrill (256 × 256), Lion (512 × 512), Peppers (1024 × 1024) is proposed. In addition, the effectiveness of the proposed IEA is verified by various experimental analysis. The experiment results show that the algorithm has good correlation coefficients (CCs), information entropy (IE) with an average of 7.9988, number of pixels change rate (NPCR) with average of 99.6080%, and unified averaged changed intensity (UACI) with average of 33.4589%; this indicates the efficacy of the proposed IEAs.