In dam health diagnosis, the information uncertainty and the information fusion of diagnosis indexes are common but difficult problems. An improved cloud fusion algorithm based on the cloud drop concept is proposed. In view of the specific features of the cloud drop in the cloud model, cloud drops from several "atom clouds" are produced with the forward cloud generator firstly. Then, the cloud integration is conducted by weighting operation. The "synthetic cloud" is finally obtained with the backward cloud generator. Thus, the transfer and fusion of the information uncertainty in the cloud model are realized. A practical dam health diagnosis example based on the improved cloud fusion algorithm is presented to verify its feasibility and reasonability. The result shows that the proposed algorithm is particularly suitable for the multi-index, multi-hierarchy and different-weight dam health diagnosis.