Masoud Sedaghatzadeh was arrested at Kuala Lumpur's international airport on February 15, a day after the alleged plot was exposed by an apparently unintended blast at a Bangkok house occupied by three Iranian suspects.
He had arrived in Malaysia the night before on a flight from Thailand.
Sedaghatzadeh denied involvement in the botched Bangkok bomb case as he appeared before a Kuala Lumpur court for the extradition application.
"Why am I here? I don't have anything to do with the case," he said in Farsi, speaking to the court through an interpreter.
Malaysia was acting on a Thai extradition request, said Kamal Baharin Omar, head of extraditions with the attorney-general's office.
A decision may be weeks away and the government has asked for a month delay until the next hearing, saying it was awaiting further evidence from Thai authorities backing the extradition request.
The next hearing was set for April 16.
Sedaghatzadeh's lawyer, Mohamad Nashir Hussin, said the application was invalid as there was no extradition treaty between the two neighbours and the government based its request on an "old" 1911 treaty that he said was outdated.
But Kamal said the Thai request was valid.
Sedaghatzadeh is one of three Iranian men detained in a case that saw tensions spike between arch-foes Iran and Israel following earlier bomb attacks targeting Israeli embassy staff in India and Georgia.
Israel has accused Iran of orchestrating a terror campaign, a charge angrily denied by Tehran.
One of the Bangkok suspects had his legs blown off as he hurled an explosive device at police while fleeing the blast in the Thai capital.
Sedaghatzadeh has said he is a car parts dealer who came to Malaysia on business, while his lawyer said his client had visited Thailand for a "short holiday."
He was seeking transit to Iran when he was arrested, Malaysian authorities have said.