The present invention provides a method of processing a video signal based on inter prediction, the method comprises constructing a merge list based on a neighboring block of a current block; adding a history-based merge candidate representing motion information of a previously coded block of the current block to the merge list; obtaining a merge index indicating a merge candidate used for inter prediction of the current block within the merge list; generating a prediction block of the current block based on motion information of the merge candidate indicated by the merge index; and adding a residual block of the current block to the prediction block to reconstruct the current block, wherein when the history-based merge candidate has motion information that is not redundant with a pre-defined merge candidate among merge candidates included in the merge list, the history-based merge candidate is added to the merge list.