According to one embodiment, a separation and extraction apparatus includes an extraction unit, separation unit, air supply mechanism, detector, and controller. The extraction unit extracts and conveys one or more paper sheets from a stack of paper sheets. The separation unit separates one paper sheet from the other paper sheet(s) of the one or more paper sheets. The air supply mechanism supplies air toward a side surface of the stack. The detector detects a bundle state of the stack, which is related to a contact state between the paper sheets. The controller sets an extraction condition depending on the bundle state, which includes drive conditions for the extraction unit, separation unit, and air supply mechanism.