A video display system for a vehicle includes a video display device disposed in the vehicle so as to be viewable by a driver of the vehicle. A camera is disposed at the vehicle and having an exterior field of view and operable to capture image data. A control includes a data processor. The control, responsive at least in part to processing by the data processor of captured image data, detects an object present exterior of the vehicle that is in the field of view of the camera, and determines if the detected object constitutes a hazardous condition. Responsive to determination of the hazardous condition, the control controls the video display device to automatically display an alert to the driver of the vehicle, with the alert including display of video images of the object that are derived from captured image data or a graphic overlay on displayed video images.