There is provided an image processing apparatus and an image processing method by which a reduction in encoding efficiency can be suppressed. A prediction residual of an image is orthogonally transformed, the number of significant figures of coefficient data obtained by performance of orthogonal transform on the prediction residual is controlled on the basis of a bit depth indicating a range of pixel values of a local level that is a data unit smaller than a sequence level of the image; the coefficient data is quantized, and the number of significant figures of a quantized coefficient obtained by quantization of the coefficient data is controlled on the basis of the bit depth of the local level; and the quantized coefficient is encoded, and a bit stream is generated. The present disclosure is applicable to, for example, an image processing apparatus, an image encoding apparatus, or an image decoding apparatus.