An image processing apparatus that is capable of improving image stabilization performance by improving motion vector search performance by restricting a search range even for an image with a large motion due to a camera shake of an image pickup apparatus at a tele-end side of a zoom lens or a shoot while walking at a wide-end side. A motion vector search unit searches for a motion vector of a reference image later input from an image pickup device with respect to a standard image input previously. A control unit sets at least one of a search range and a search position of a motion vector searched by the motion vector search unit based on position-posture change information about the image pickup apparatus detected by a detection unit and image stabilization control information obtained from an image stabilizing unit.