An image processing apparatus reconstructs coded image data, having hierarchical encoded data structure for stepwise decoding from a low resolution toward a high resolution, in accordance with a display resolution or a display size of a decoding apparatus, thereby simplifies processing necessary for the next decoding processing. For this purpose, to optimize coded image data encoded by decomposition level=4 JPEG 2000 coding scheme (original image size is 1024.times.1024 pixels) for default display in resolution of 256.times.256 pixels, data at resolution levels 0 to 2 are decoded, thus a 256.times.256 resolution (image size) image is obtained. The 256.times.256 resolution image data, as the lowest resolution LL sub-band in the JPEG 2000 standard, is reconstructed with encoded data at resolution level=0.