Chacon said he was making his rounds at Jackson's estate on an overnight shift in late 1992 or early 1993 when he saw Jackson and the boy in a whirlpool bath. He said he later saw them take a shower together, then leave the shower and stand naked across from each other.
Chacon said Jackson caressed the boy's hair, kissed him on the mouth and elsewhere and engaged in oral sex.
The former guard testified that at that point he left.
Chacon said that several weeks or a month later he saw Jackson kiss the boy. He said that the kiss was "passionate" and that Jackson then put his hands near the boy's crotch.
On cross-examination, Chacon's credibility came under scathing attack.
Jackson defense attorney Thomas Mesereau Jr. quickly established that Chacon had sued Jackson, claiming he was improperly fired, and that Jackson had countersued, accusing Chacon of stealing from him.
The witness acknowledged he was ordered to pay $25,000 for allegedly stealing Jackson's property, which Chacon said was only a candy bar.
He also acknowledged that he and others were ordered to pay more than $1 million in legal expenses to Jackson but that he had not paid anything because he had filed for bankruptcy.
Jackson, 46, is on trial on charges of molesting a 13-year-old boy in 2003. The prosecution is trying to establish a pattern of improper sexual conduct by digging deep into Jackson's past, reports CBS News Correspondent Lori McLaughlin.
The boy in the security guard's stories is reportedly Jackson's 1993 accuser, whom the superstar paid a reported $20 million to keep quiet.
The guard testified after a one-day break in the trial that allowed Jackson to attend the Los Angeles, who represented the singer in the 1994 settlement.
On Wednesday it was learned that Jackson's judge was notified that jurors were overheard laughing at a remark that might have been mocking a witness, but no court action was planned.
"It is an unsubstantiated rumor and there is no investigation," court administrator Darrel Parker said Wednesday.
Jurors are strictly barred from talking about cases before they begin deliberating.