A game apparatus acquires a designated position Q, on an image, which corresponds to a touch position T detected by a touch panel, and a depth value of the designated position Q. A game apparatus calculates a designated three-dimensional position P in a three-dimensional virtual space, based on the designated position Q on the image and the depth value. The game apparatus next determines an orientation of a cursor object to arrange the cursor object at the calculated designated three-dimensional position P. The game apparatus next uses a virtual camera to take an image of the virtual space including the cursor object, and displays the image on an upper LCD.