An image processing apparatus obtains a plurality of pieces of image data with different exposure amounts and then performs a level-conversion of the image data by applying input/output characteristics thereto. The apparatus encodes the image data whose level has been converted and decodes the encoded image data. The apparatus further applies inverse characteristics of the input/output characteristics to the decoded image data and then generates combined image data. In generating the combined image, the input/output characteristics are set in accordance with a combining ratio of each of the image data.