A method and a portable terminal for identifying a counterfeit bill. The method includes receiving, by the portable terminal, an image of a bill photographed using visible rays and an image of the bill photographed using infrared rays; determining a denomination of the bill by comparing the image photographed using the visible rays with a denomination database; obtaining correction information for making the image photographed using the visible rays correspond to a corresponding bill image in the denomination database; forming a corrected image by correcting the image photographed using the infrared rays using the correction information; binary-coding the corrected image; and determining whether the bill is counterfeit by comparing the binary-coded corrected image with an image of the corresponding bill pre-stored in a genuine bill database.