A method for dynamically correcting misalignment of a vehicular camera includes fixedly disposing a camera at a vehicle and operating the camera to acquire multiple frames of image data while the vehicle is moving generally in a straight line. A plurality of sets of feature points are selected in an image frame, with each set including a first feature point and a second feature point. For each set of feature points, a motion trajectory of that set's feature points is tracked in subsequent image frames. For each tracked first and second feature points, a vanishing point is established in the image plane. Based on the established vanishing point, a vanishing line is determined in the image plane. When the vanishing line is determined to be non-horizontal in the image plane, at least one of pitch, roll or yaw of the camera is adjusted to correct rotational misalignment of the camera.