A projection system and a positioning method capable of positioning a projected image are provided. The projection system includes a projection device, an image capturing device, and a determination module. The projection device projects a plurality of display grid points. The image capturing device captures images of the plurality of display grid points to obtain a plurality of display results corresponding to the plurality of display grid points. The determination module receives the plurality of display results. The determination module controls the projection device not to project at least one unrecognizable display grid point corresponding to the at least one unrecognizable display result when determining that the plurality of display results include the at least one unrecognizable display result. The invention is provided to improve the accuracy of matching or stitching of a projected image.