A PIP (Picture In Picture) processing apparatus processes a main image and a secondary image and includes a scaling circuit, a memory circuit, a first selecting circuit and a processing circuit. The scaling circuit scales down the secondary image to output a scaled-down secondary image. The memory circuit stores the main image and the scaled-down secondary image. The first selecting circuit is connected with a controlling circuit to receive an image selecting signal, and is connected with the memory circuit to select the scaled-down secondary image or the main image as an output according to the image selecting signal. The processing circuit is connected with the first selecting circuit to process the main image or the scaled-down image.