AbstractExponential stability analysis of discrete‐time nonlinear systems with a time‐varying delay is concerned in this article. The main contribution of this article lies in proposing an improved stability analysis method called a delay‐mode‐based functional method. The improved method is presented by weakening a condition in the Lyapunov–Krasovskii functional method. With the help of the new method, less conservative exponential stability criteria of discrete‐time linear systems with a time‐varying delay are obtained and two classical examples are given to show that the delay‐mode‐based functional method is effective.