Umar Patek, 45, faces five other counts, including bomb-making and illegal firearms possession, and prosecutors say they will push for the death penalty.
Amid a security lockdown, with anti-terrorism units deployed in Jakarta, Patek arrived at the court in an armoured police vehicle, giving a two-thumbs up gesture with his handcuffed hands, but said nothing.
The Indonesian is charged with premeditated murder and assembling bombs for the October 2002 Bali nightclub attacks, which killed 202 people including 88 Australians, and strikes on churches in Jakarta on Christmas Eve of 2000.
"Defendant Umar Patek committed an evil conspiracy with others to commit a crime by bringing in, obtaining, providing or owning firearms, ammunition or explosive materials and other dangerous materials to carry out terrorism," prosecutor Widodo Supriady said, reading part of the indictment to court.
Wearing a white Muslim skull cap, white trousers, white shirt and an orange prison shirt, he smiled broadly to reporters before entering a holding cell inside the court building.
The West Jakarta district courtroom was packed with about 100 spectators, more than half of them reporters, many of whom were working for Australian media.
Patek, facing a panel of five judges, was flanked by prosecutors and defence lawyers, who say attempts are being made to paint him as a Bali bombings mastermind.
He sat in a white shirt, wearing glasses and quietly reading the indictment and after the session adjourned for next Monday, he shook hands with judges and prosecutors and smiled as he was escorted from the courtroom.
The trial of Patek, believed to be a key member of the Al-Qaeda-linked Southeast Asian terror network Jemaah Islamiyah (JI), is expected to last over four months as prosecutors present evidence from 86 witnesses.
They will testify to Patek's decade-long involvement in terror, prosecutor Bambang Suharyadi told AFP.
Patek allegedly used simple household tools including a rice ladle to assemble bombs, which were housed in ordinary filing cabinets, according to Suharyadi and details contained in the indictment.
"There are several foreigners who are prepared to give testimonies. But at this point, we worry about their safety so let's wait and see how things go," the prosecutor said.
The indictment states that Patek was instructed by fellow Indonesian Imam Samudra to assemble the bombs for the Bali attacks. Samudra, convicted of being one of the masterminds, was executed in 2008 by an Indonesian firing squad.
Riduan Ismudin, also known as Hambali and widely regarded as the brain behind the attacks, was arrested in 2003 and is now held by US forces at Guantanamo Bay.
But defence lawyer Asludin Hatjani told reporters Monday: "Prosecutors are trying to suggest that Patek was the mastermind of the Bali bombings, but he was not. He didn't initiate the attack."
"The premeditated murder charge was also inappropriate. At the time of the bombing, the terrorism laws were not in place yet. To charge him with premeditated murder for alleged terror acts is not right," he added.
Among the crowd in court Monday was Farihin, an Indonesian who goes by a single name and who said he had attended the same terrorist training camp on Pakistan's border with Afghanistan as Patek.
"Umar is an expert in demolition. He was an ordinary member of the team, not the mastermind or perpetrator of what happened in Bali," said Farihin, a former JI member who was twice jailed in Indonesia for Islamic militancy and is now a cold drinks vendor.
He said he last saw Patek before the Bali attacks.
Patek, once the most-wanted terror suspect in Indonesia, who spent nearly a decade on the run, had a $1 million bounty on his head under the US rewards for justice programme.
He was extradited to Indonesia after being arrested in January 2011 in the Pakistani town of Abbottabad, where US commandos killed Al-Qaeda chief bin Laden in May.