An image processing apparatus comprises: means for performing color-reduction processing for a block; means for comparing color data of respective pixels in the block, thereby specifying a placement pattern of the color data included in the block; means for extracting, as first color data, color data corresponding to a pixel at a predefined position in the block, and further extracting color data other than the first color data included in the block; means for outputting the placement pattern specified, and the first color data and the color data other than the first color data, which are extracted; and means for controlling to execute color-reduction processing, for second image data formed from the first color data output, upon determining blocks each including a predetermined number of pixels as blocks to be processed, thereby further controlling to re-execute, for the block having undergone the color-reduction processing, processing by each means.