A game system that is a non-limiting example information processing system includes a game apparatus, and an input device and a television are connected to the game apparatus. If graphics software is executed and coloring processing is started, a virtual object is displayed, and when a mask mode is set, a real space is imaged by an infrared imaging unit provided on the input device. A candidate image based on an imaging result is generated, and according to a fixing instruction by a user, the candidate image is fixedly displayed, as a mask image, in the front of an image including the virtual object. When a coloring instruction is input, an area of the virtual object image not overlapping with the mask image is colored and color information of the virtual object image is updated, whereas, an area overlapping with the mask image is not colored and the update of the color information is restricted.