A gesture recognition method for an interactive system includes the steps of: capturing image windows with an image sensor; obtaining information of object images associated with at least one pointer in the image windows; calculating a position coordinate of the pointer relative to the interactive system according to the position of the object images in the image windows when a single pointer is identified according to the information of object images; and performing gesture recognition according to a relation between the object images in the image window when a plurality of pointers are identified according to the information of object images. The present invention further provides an interactive system.