1. An image processing apparatus comprising: an unit adapted to acquire a position and orientation of a user's viewpoint; an unit adapted to acquire a position and orientation of a physical object of interest; an unit adapted to acquire an image of physical space including the physical object of interest; a decision unit adapted to decide a region of the physical object of interest in the image of the physical space; a processing unit adapted to perform blurring processing of an inclusion region including the decided region; an unit adapted to arrange a virtual object in virtual space at the position and orientation of the physical object of interest; an unit adapted to generate an image of the virtual space based on the position and orientation of the viewpoint; an unit adapted to generate a composite image by superimposing the image of the virtual space on the image of the physical space that has undergone the blurring processing; and an unit adapted to output the composite image.