An image pickup apparatus that is capable of reducing degradation of image quality of the whole display screen of a display section while improving display delay with respect to an observed area. In an image pickup apparatus, an image pickup section picks up an image of an object, and a development processor generates image data by developing input data acquired by the image pickup section. A first image generation unit generates a first image by performing image processing on part of the image data. A second image generation unit performs predetermined image processing on the image data to thereby generate a second image which is different in the number of steps of image processing from the above image processing. An image synthesis section generates a third image by synthesizing the first image with the second image, and a display device displays the third image.