This paper proposes an omni-directional image generation algorithm with parametric image compensation. The algorithm generates an omni-directional image by transforming each planar image to the spherical image on spherical coordinate. Parametric image compensation method is presented in order to compensate vignetting and illumination distortions caused by properties of a camera system and lighting condition. The proposed algorithm can generates realistic and seamless omni-directional video and synthesize any point of view from the stitched omni-directional image on the spherical image. Experimental results show that the proposed omni-directional system with vignetting and illumination compensation is approximately $1{sim}4dB$ better than that which does not consider the said effects.