The present technology relates to an image processing apparatus and method capable of preventing an increase in a cost of the apparatus. A setting unit sets identification information for identifying a correspondence relationship between a size of a block of an image and changing of a prediction method applied to the block, and an inter-prediction unit generates a prediction image according to the identification information. An encoder codes the block by using the prediction image so as to generate a coded stream. In addition, the encoder transmits the coded stream and the identification information. The present technology is applicable to, for example, a case of coding/decoding an image, and the like.