An image interpolation processing apparatus includes a motion vector generating module, for generating a first reference motion vector and a second reference motion vector for an interpolated block of an interpolated frame according to the interpolated block and a plurality of blocks adjacent to the interpolated block; a blurred block processing module, for determining an area property of the interpolation block being one of an image covered area, an image uncovered area and a non-blurred area according to the first reference motion vector and the second reference motion vector, and a representative motion vector of the interpolated block being one of the first reference motion vector and the second reference motion vector; and a frame interpolation module, for generating an image content of the interpolated block according to the representative motion vector and the area property.