An image processing apparatus and a processing method thereof are provided. The image processing apparatus includes an image capturing module, an image separation module, an image stabilization module, a temporal noise reduction module, and a spatial noise reduction module. The image capturing module captures a plurality of Bayer pattern images. The image separation module decreases the Bayer pattern images in size and transforms them into a plurality of YCbCr format images. The image stabilization module receives Y channel images of the YCbCr format images and the Bayer pattern images to perform motion estimation, to produce a plurality of global motion vectors (GMVs). The temporal noise reduction module performs temporal blending process on the Bayer pattern images according to the GMVs, to produce first noise reduction images. The spatial noise reduction module performs 2-dimensional spatial noise reduction on the first noise reduction images to produce second noise reduction images.