A block management method for managing physical blocks of a rewritable non-volatile memory, and a memory controller and a memory storage apparatus using the same are provided. The method includes grouping the physical blocks into at least a data area, a free area, and a replacement area, and grouping the physical blocks of the data area and the free area into a plurality of physical units. The method also includes when one of the physical blocks belonging to of the physical units of the data area becomes a bad physical block, getting a physical block from the replacement area and replacing the bad physical block with the gotten physical block. The method further includes associating a physical unit that contains no valid data in the free area with the replacement area. Thereby, the physical blocks can be effectively managed and the access efficiency can be improved.