A method for stitching images captured by multiple vehicular cameras includes disposing a plurality of cameras at the vehicle so as to have respective fields of view exterior the vehicle. Image data captured by first and second cameras of the plurality of cameras is processed to detect an object present in an overlapping portion of the fields of view of the first and second cameras. Image data captured by the first and second cameras is stitched, via processing provided captured image data, to form stitched images. Stitching of captured image data is adjusted responsive to determination of a difference between a characteristic of a feature of a detected object as captured by the first camera and the characteristic of the feature of the detected object as captured by the second camera in order to mitigate misalignment of stitched images.