A vision system for a vehicle includes a camera disposed at a vehicle and having a field of view exterior of the vehicle, an image processor operable to process image data captured by the camera, and a display operable to display images derived from image data captured by the camera. The image processor, via processing of image data captured by the camera, determines a noise level in image data captured by the camera. The vision system applies a lens shading algorithm to captured image data, and the vision system adjusts a level of the lens shading algorithm responsive to the determined noise level.