An electronic device, which can recognize and be controlled by a gesture of a hand, obtains an image that comprises the hand and image depth levels of objects within the image. Static objects are filtered from the image. A first establishing module obtains hand coordinate information and establishes a first block comprising the hand. Modules further obtain a depth level of each pixel of the first block and counts the number of pixels of each depth level. A second establishing module obtains hand depth information according to the counting result and establishes a second block including the hand. A recognizing module detects a moving track of the hand in the second block and recognizes a gesture of the hand according to a library of gestures. A gesture recognition method is also provided.