A method for performing lens shading compensation is provided. The method includes: receiving at least two series of source images of different exposure settings; performing first lens shading compensation on the at least two series of source images respectively; analyzing luminance distribution of the at least two series of compensated source images; composing a series of HDR images from the at least two series of compensated source images according to the luminance distribution; performing second lens shading compensation on the series of HDR image; and performing tone mapping on the series of compensated HDR images. A system for performing lens shading compensation is also provided.