An apparatus for processing a video signal and method thereof are disclosed. The present invention includes receiving prediction mode information, interpolating information and a residual of a current block, reconstructing an interpolating pixel using the interpolating information and a neighbor block, and reconstructing the current block using the interpolating pixel, the prediction mode information and the residual, wherein the interpolating information is generated based on a location of the current block. According to an apparatus and method for processing a video signal, high reconstruction rate can be obtained by improving the related art method having limited intra prediction modes available for a current block located on a boundary area of a picture in encoding in a manner of reconstructing and using an interpolating pixel based on interpolating information.