An image processing apparatus that is capable of generating a wide-angle composite image in which halation and black collapse are reduced without needing lots of memory quantity. An obtaining unit obtains images that are photographed with different exposure values while changing a photographing target area continuously. A detection unit detects an overlapped area where an object overlaps between adjacent images among the images obtained by the obtaining unit. A generation unit generates a composite area in which overlapped areas detected by the detection unit are overlapped so as not to exceed a predetermined count. A computation unit computes composition ratios of the images obtained by the obtaining unit based on the exposure values and signal values at the times when the images are photographed. A composition unit generates a wide-angle composite image by compositing images in the composite area with the composition ratios computed.