A bill identification apparatus accurately identifying an authenticity with a folding line formed in a watermark. The bill identification apparatus includes: bill reading means; a converter which converts the watermarked image read by the bill reading means for each pixel containing color information having brightness; a image correction processing part which calculates an average density value for each pixel array in one direction, an average density value for each pixel array in the other direction, and an average density value of an entire watermarked image and corrects density values of respective pixels so as to approximate or match the average density value of the entire watermarked image; a reference data storage part which stores a reference watermarked image; an identification processing part which compares the corrected image by the image correction processing part with the reference watermarked image and identifies an authenticity.