An image processing system and a method thereof is disclosed. A palette including an N number of index pixel values of a processing target image and corresponding index values is created. N is an integer equal to or smaller than 2. An image indexing process is performed on each processing target pixel. When a pixel value of the processing target pixel is a pixel value of one of the N number of index pixel values, a pixel data on a converted image corresponding to the processing target pixel is set as an index value on the palette corresponding to the pixel value of the processing target pixel. Otherwise, the pixel data on the converted image corresponding to the processing target pixel is set as an exceptional value, and the pixel value of the processing target pixel is stored in an exception buffer.