Method and apparatus of coding 360-degree virtual reality (VR360) pictures are disclosed. According to the method, when a first MV (motion vector) of a target neighboring block for the current block is not available within the 2D projection picture, or when the target neighboring block is not in a same face as the current block: a true neighboring block picture corresponding to the target neighboring block is identified within the 2D projection; if a second MV of the true neighboring block exists, the second MV of the true neighboring block is transformed into a derived MV; and a current MV of the current block is encoded or decoded using the derived MV or one selected candidate in a MV candidate list including the derived MV as an MV predictor.