Hot spot detection with satellite images, especially with synthetic aperture radar (SAR) images is still a challenging task. Several researchers have used TM/optical data for identification of hot spot but the use of SAR data is very limited for this type of application. The fusion of SAR data with TM/optical data may add additional information which in turn will lead for enhancement of detection capability of the hot spot. Therefore, this study explores the possibility of fusion of Moderate Resolution Imaging Spectroradiometer (MODIS) and Phased Array L-band Synthetic Aperture Radar (PALSAR) satellite images for the hot spot detection. Image fusion is emerging as a powerful tool where information of various sensors can be used for obtaining better results. For this purpose, vegetation greenness and roughness information which is obtained from MODIS and PALSAR satellite images, respectively, are used for fusion, and then, a contextual-based thresholding algorithm is applied to the fused image for hot spot detection. The proposed approach comprises of two steps: (1) application of genetic algorithm-based scheme for image fusion of MODIS and PALSAR satellite images, and (2) classification of the fused image as either hot spot or non-hot spot pixels by employing a contextual thresholding technique. The algorithm is tested over the Jharia Coal Field region of India, where hot spot is one of the major problems and it is observed that the proposed thresholding technique classifies the each pixel of the fused image into two categories: hot spot and non-hot spot and the proposed approach detects the hot spot with better accuracy and less false alarm.