The Pan-STARRS1 survey is currently obtaining imaging in 5 bands (grizy) for the $3pi$ steradian survey, one of the largest optical surveys ever conducted. The finished survey will have spatially varying depth, due to the survey strategy. This paper presents a method to correct galaxy number counts and galaxy clustering for this potential systematic based on a simplified signal to noise measurement. A star and galaxy separation method calibrated using realistic synthetic images is also presented, along with an approach to mask bright stars. By using our techniques on a ~69 sq. degree region of science verification data this paper shows PS1 measurements of the two point angular correlation function as a function of apparent magnitude agree with measurements from deeper, smaller surveys. Clustering measurements appear reliable down to a magnitude limit of rps<22.5. Additionally, stellar contamination and false detection issues are discussed and quantified. This work is the second of two papers which pave the way for the exploitation of the full $3pi$ survey for studies of large scale structure.
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