An image forming apparatus including at least one option cassette, and a paper jam handling method performed in the image forming apparatus are provided. The paper jam handling method includes the operations of detecting whether paper jam occurs in the image forming apparatus, checking whether paper sheets exist on a transfer path of the image forming apparatus and on a transfer path of the option cassette, when the paper jam is detected, and leaving the paper sheet on the transfer path of the option cassette as it is and discharging the paper sheet caught on the transfer path of the image forming apparatus. Accordingly, paper damage or paper consumption may be prevented by not discharging a paper sheet caught on a transfer path of at least one option cassette during paper jam.