A method and apparatus for deriving aligned inter-view prediction for uni-prediction and bi-prediction in three-dimensional and multi-view coding with illumination compensation enabled are disclosed. When the illumination compensation is enabled, the derivation process for a single reference block in reference list_0 or reference list_1 in the case of uni-prediction is aligned with the derivation process for a reference block in reference list_0 and a reference block in reference list_1 in the case of bi-prediction. The reconstruction process generates the reference block based on a temporal reference block when Inter prediction is used and based on an inter-view reference block when inter-view prediction is used. For the uni-prediction and bi-prediction, the same clipping process can be included in the reconstruction process, the illumination compensation process, or both.