It is well-known that a complex circulant matrix can be diagonalized by a discrete Fourier matrix with imaginary unit $\mathtt{i}$. The main aim of this paper is to demonstrate that a quaternion circulant matrix cannot be diagonalized by a discrete quaternion Fourier matrix with three imaginary units $\mathtt{i}$, $\mathtt{j}$ and $\mathtt{k}$. Instead, a quaternion circulant matrix can be block-diagonalized into 1-by-1 block and 2-by-2 block matrices by permuted discrete quaternion Fourier transform matrix. With such a block-diagonalized form, the inverse of a quaternion circulant matrix can be determined efficiently similar to the inverse of a complex circulant matrix. We make use of this block-diagonalized form to study quaternion tensor singular value decomposition of quaternion tensors where the entries are quaternion numbers. The applications including computing the inverse of a quaternion circulant matrix, and solving quaternion Toeplitz system arising from linear prediction of quaternion signals are employed to validate the efficiency of our proposed block diagonalized results. A numerical example of color video as third-order quaternion tensor is employed to validate the effectiveness of quaternion tensor singular value decomposition.
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