With the advances in sensor technology, data mining techniques and the internet, information and communication technology further motivates the development of smart systems such as intelligent transportation systems, smart utilities and smart grid. With the availability of low cost sensors, there is a growing focus on multi-sensor data fusion (MSDF). Internet of Things (IoT) is currently connecting more than 9 billion devices. IoT includes the connectivity of smart things which focuses more on the interactions and interoperations between things and people. Key problem in IoT middleware is to develop efficient decision level intelligent mechanisms. Therefore, we focus on IoT middleware using context-aware mechanism. To get automated inferences of the surrounding environment, context -aware concept is adopted by computing world in combination with data fusion. We conduct a comprehensive review on context awareness for MSDF in IoT and discuss the future directions in the area of context-aware computing.