The woman, who was Jackson's personal maid for about five years and whose son settled a molestation claim with the singer, told of seeing Jackson in the shower with a boy about 8 years old who frequently stayed at Neverland.
"Are you aware of him staying anywhere other than in Michael Jackson's bedroom?" asked prosecutor Ron Zonen.
"No," said the woman, speaking with a Spanish accent. "He stay there."
The woman was called to the stand in Jackson's child molestation trial Tuesday after her son came under tough cross-examination about his story of being molested three times more than a decade ago. He received a $2.4 million settlement from Jackson in 1994 after claiming the pop star groped him.
The woman was part of a prosecution effort to show that Jackson has a pattern of molestation or inappropriate behavior with boys, which could add credibility to the current accuser's molestation allegations.
"It's not just the number of witnesses who are coming forward it is the detail they are offering," said CBS News Legal Analyst Andrew Cohen.
"Even if these jurors don't believe everything that prosecution witnesses say, they probably believe enough to see patterns in Jackson's behavior; sinister patterns; and that is a problem the defense is going to have to find a way to overcome," Cohen said.
Jackson is accused of molesting a 13-year-old cancer survivor in February or March of 2003. The case was scheduled to resume Thursday after a break Wednesday.
Before the former maid took the stand, defense attorney Thomas Mesereau Jr. raised the issue of whether she had a financial stake in his story by showing she had been paid $20,000 to appear on the TV show "Hard Copy."
The woman testified that one day she used a key to enter Jackson's bedroom and heard "laughing, playing — like playing around."
"First I thought they were playing in bathtub or Jacuzzi or outside in his garden and I walked in and they were in the shower," she said, adding later, "I peek in and they were in shower."
The woman said she saw their clothes on the floor outside the shower but retreated because she thought Jackson would be mad if he found her there.
Interrogated at length about how she knew who was in the shower when the door was clouded, the witness said she was certain that she saw "Mr. Jackson and little kid" through the steam.
But she also admitted that under oath in 1994 she said she never saw Michael Jackson molest a child or touch anyone in a sexual way, reports CBS News Correspondent Vince Gonzales.
Under cross-examination, she said she also recalled seeing Jackson and the boy in Jackson's bed watching TV, both wearing nothing from the waist up. She said they were under the covers and she could not tell if they were clothed.
She acknowledged that people would often hang out on Jackson's bed and watch TV, and that she even served guests food there.
The former maid also told of seeing actor Macaulay Culkin at Neverland and said he also stayed in Jackson's bedroom. She called him "the little kid from the movies" and said he often came with his father, mother, brother and sister, but sometimes was brought alone by Jackson.
Although the prosecution was allowed to present testimony about Culkin, the defense has asserted that the "Home Alone" star has denied being molested, and Culkin's spokeswoman has said he won't be involved in the court case.
Earlier, the former maid's 24-year-old son clashed with Mesereau as the attorney cross-examined him about inconsistencies between the account he gave Monday and his past interviews.
He acknowledged Tuesday that in a 1993 interview he initially said Jackson did not molest him, saying he tried to keep it secret because he didn't want friends to tease him. Mesereau asked if investigators became aggressive during the interview, calling Jackson a "molester" and cursing.
The witness said he did not remember details of the interview.
"It was only after you were pushed real hard by the sheriffs that you began to say anything like that," Mesereau said, drawing a prosecution objection that was sustained.
The jury, which was told he received a settlement but was not told the sum, also heard from the young man's attorney. Kris Kallman acknowledged that the terms of the settlement involved no admission of wrongdoing by Jackson and specified it was intended to protect Jackson's reputation.
The witness also contradicted himself on a couple of points. Under questioning by Mesereau, he said Jackson would give him money whenever he read a book or got an A. Under questioning by one of the prosecutors, he said that did not happen.
There is no court today and the singer will reportedly travel to Los Angeles for Johnnie Cochran's funeral, said Gonzales. Cochran was Jackson's attorney when the allegations first surfaced and he arranged the settlement with the young man and his mother.