According to one embodiment, first and second branch paths of a decoloring apparatus are formed downstream in a sheet conveying direction of a reading section in a conveying path. A diverting section is provided at a branch point of the first and second branch paths in the conveying path. A control section determines on the basis of image data whether decoloring processing should be applied to a sheet, diverts, if determining that the decoloring processing should be applied to the sheet, the sheet to the first branch path with the diverting section, and diverts, if determining that the decoloring processing should not be applied to the sheet, the sheet to the second branch path with the diverting section. A decoloring section is provided between the reading section and the branch point in the conveying path and heats the sheet to decolor an image formed with a decolorable color material.