A privacy protection method and apparatus for a mobile terminal are provided. The method includes specifying basic information, privacy protection indication, and fictitious information of a contact item to be recorded in a contact list, determining, when a contact is received from an external terminal, whether a privacy protection function is activated for the external terminal, and outputting, when the privacy protection function is activated for the external terminal, a contact reception screen and a contact handling screen that include pre-specified fictitious information of the external terminal and exclude pre-specified basic information thereon. As a result, when a contact is received from a counterpart, information on the counterpart can be prevented from being displayed on the screen. Hence, it is possible to prevent inadvertent disclosure of counterpart information.