Abu Bakar Bashir, 72, faces a maximum penalty of death if found guilty.
"These charges against me are fabricated," the smiling, white-bearded cleric before arriving at the tightly guarded South Jakarta District Court in an armored personnel carrier. "All I ever wanted to do was defend Islam."
Indonesia, a mostly moderate and secular nation of more than 237 million people, has been hit by a string of suicide bombings blamed on Jemaah Islamiyah, the al Qaida-linked network co-founded by Bashir just over a decade ago.
More than 260 people have been killed since 2002, many of them foreign tourists.
Bashir, seen as a driving force behind the country's small but increasingly vocal hardline fringe, has been tried in recent years for conspiracy in those attacks.
But only lesser charges, such as violating immigration laws, for which he spent 26 months in jail, have ever stuck.
This time, prosecutors insist, they have enough evidence for a terror conviction.
The fiery cleric was accused of helping set up, fund, arm and mobilize foot soldiers for a new terror cell uncovered last year in westernmost Aceh province as part of efforts to carve out an Islamic state.
Police say Al Qaida-in-Aceh was planning Mumbai-style rifle and bombings on Western hotels and embassies and several high profile assassinations, including on Indonesian President Susilo Bambang Yudhoyono.
The cell was also blamed for commando-styled robberies on banks last year, allegedly to help buy weapons, and several deadly attacks on police stations.
"The aim was to spread panic and to divide the people and the ruling government, thus paving the way for a takeover," prosecutor Muhammad Taufik said.
The courthouse, rung by more than 2,000 police, was packed with his supporters, most of the men wearing white skull caps and the women fully shrouded in black veils.
They interrupted Taufik's reading of the 93-page indictment with shouts of "God is Great!" every time the cleric was mentioned by name.
Judges adjourned the trial until next week, when Bashir's lawyers are due to respond to the charges.
Indonesia's fight against terrorism has won praise, with hundreds of militants killed or captured and convicted, but extremists have proved to be a resilient foe.
While Jemaah Islamiyah has been severely weakened, new groups like the Aceh cell have continued to pop up.
At the same time, the country is grappling with religious tensions and violence.
Last week, 1,500 hard-liners attacked Ahmadiyah sect members with sticks and machetes, killing three men. Days later, a mob set two churches ablaze to protest a Christian's blasphemy sentence as too lenient.
Prosecutors said Monday that Bashir told followers in North Sumatra province in July 2009 that "non-believers" - incuding officials who did not support the creation of an Islamic state - should be killed and their property seized.
"Before waging jihad, we must first occupy a territory, albeit small, and gain full control of it," he was quoted as saying.
Several months later, he allegedly met with bombmaker Dulmatin, since killed in an anti-terror raid, to discuss the creation of Al Qaida-in-Aceh for which he provided $140,000.
"The defendant supported illegal military training and provided funds to buy weapons, ammunition and explosives," Taufik said.
Bashir's lawyers dismissed the accusation as "absurd," arguing that prosecutors had based their case "on assumptions instead of facts."