Abstract: Disclosed is an IP camera and a video playback method thereof, the IP camera connected to a host through the network, the IP camera includes an image capturing unit, a processor, and an input/output buffer unit. An external video is captured by the image capturing unit, and the external video includes a plurality of frames. An image outputting rate is determined by the processor, and an output external image is produced by reducing a resolution of the external image and remarking a confirm flag in at least one first frame when an image output rate is lower than a threshold value. The external image or the processed image is inputted to the I/O buffer unit to form an output external image. By way of the present invention, the captured video may still be watched instantly and fluently on the host while the host is suffering from the network congestion.