An apparatus and a method of recognizing an external device in a portable terminal are provided. The apparatus includes a connector connected to the external device, and a controller configured to transmit a connection message, if the portable terminal is connected to the external device through the connector, the connection message asking whether the external device supports a second connection scheme to the external device by using a first connection scheme, configured to receive a connection response message as a response to the connection message from the external device, configured to determine based on the connection response message whether the external device supports the second connection scheme, and configured to recognize at least one device supporting the second connection scheme in the external device by activating the second connection scheme, if the external device supports the second connection scheme.