Imam Samudra is charged with playing a key role in the planning and execution of the Oct. 12 attacks, that killed 202 people, mostly foreign tourists.
Like many of the other 33 suspects arrested over the bombings, his lawyers and police say he confessed to playing a role in the bloodiest terror strike since the Sept. 11 attacks in the United States.
If found guilty, he could be executed under anti-terror laws passed in the weeks after the bombings.
Security was tight at the government building used to host the trial on the resort island. About 50 armed officers patrolled the courthouse and hundreds more manned roadblocks set up nearby.
Samudra, 32, is suspected of being a key figure in the Al Qaeda-linked terror group Jemaah Islamiyah (search), which has been blamed for carrying out the bombings.
He is the second of 33 suspects to go on trial over the bombings.
The trial of Amrozi bin Nurhasyim, accused of buying explosives and bomb-making material used in the attack, began on May 12 and was also scheduled to continue Monday.
As Samudra sat down to hear the indictment, he looked over to his nine lawyers and shouted "God is Great" three times. They responded with smiles and cheers.
After this outburst, Samudra, who was dressed in a white loose fitting shirt and wearing an Islamic prayer cap, sat impassively.
Several relatives of Australian victims of the attack were in court to witness the proceedings, but few Balinese attended the trial.
Prosecutor Nyoman Dili accused Samudra of attending key planning meetings before the attacks, recruiting fellow bombers and arranging the financing of the bombings.
"The accused came up with the idea of the bombings, and arranged the strategy according to Islamic law," the prosecutor told the court.
Dili alleged the bombers carried out the attack to avenge the deaths of Muslims by the United States in Afghanistan, Iraq and elsewhere in the world.
In a separate courtroom, four other Bali suspects also were scheduled to go on trial Monday, accused of robbing a jewelry shop on the orders of Samudra to finance the bombings.
Samudra has told reporters he targeted the nightclubs in Bali because he was aiming to kill as many Americans as possible. Almost half the victims of the blast were Australian tourists, while seven were from the United States.
He is the most important suspect to go on trial so far, and the proceedings are expected to shed light on the inner workings of Jemaah Islamiyah and its ties to militants in the world's most populous Muslim nation.
The trial will also likely show how an aspiring computer whiz became a supporter of Usama bin Laden and a willing foot soldier in his war against the West.
Samudra, who has at least five aliases, spent time in Afghanistan in the 1990s, where he learned bomb-making skills, police and lawyers say.