A method and apparatus of video coding using history-based candidate derivation are disclosed. According to one method, a current block is inside a Shared Merge candidate list Region (SMR) or a history-based parallel processing region is received. The current block is encoded or decoded using a Merge candidate list. Only if the current block is one of first-coded N (N≥0) blocks, one of last-coded N blocks, or one of selected N blocks, the history-based candidate list is updated after the current block is encoded or decoded. In one embodiment, Merge candidate list is pre-generated for the current block in the SMR and is separately generated for the current block in the history-based parallel processing region. In another method, if the current block is inside the SMR or the history-based parallel processing region, the current block is encoded or decoded using a history-based candidate list associated with the root CU.