A dynamic image stitching system for stitching images captured by cameras of a vision system for a vehicle includes a plurality of cameras disposed at the vehicle and having respective fields of view exterior the vehicle. The field of view of each side camera partially overlaps the field of view of a front camera and partially overlaps the field of view of a rear camera. Image data captured by the plurality of cameras is processed at a processor to detect an object present in an overlapping portion of the fields of view of two cameras. The processor stitches, via a stitching algorithm, image data captured by the cameras. The processor adjusts the stitching algorithm responsive to a determination of a difference between a characteristic of the feature as captured by one of the two cameras and the characteristic of the feature as captured by another of the two cameras.