The Polish-born movie director is suing publisher Conde Nast over a 2002 article that said he seduced a woman on the way to the funeral of his murdered wife, Sharon Tate (search).
Polanski testified by video link from France, where he has lived since fleeing child-sex charges in the United States in 1978.
Tate, who was pregnant, was killed by followers of American serial killer Charles Manson in Los Angeles in 1969.
Polanski called the Vanity Fair article "particularly hurtful because it dishonors my memory of Sharon," adding, "that's not the way I behave."
He said his memories of the time immediately after Tate's death are hazy. "I was sedated and dazed," he said.
The magazine article accuses Polanski of "monstrous conduct by any bereft husband and father-to-be," his lawyer John Kelsey-Fry said in an opening statement.
"It would demonstrate a callous indifference to what had happened and to his wife's memory of breathtaking proportions."
The case went ahead after Polanski won a ruling from the House of Lords, Britain's highest appeal court, saying he could testify by video link.
Polanski was unwilling to come to Britain for fear of being arrested and extradited to the United States, which has an extradition treaty with Britain. He cannot be extradited to the U.S. under French law.
Polanski is the acclaimed director of "Chinatown," "Rosemary's Baby" and "The Pianist," which drew on his childhood experiences escaping the Holocaust and won an Academy Award for best director in 2003.
The publisher is contesting the suit. Conde Nast is based in the United States, but libel actions concerning the international media are often brought in British courts because they are considered friendlier to claimants than U.S. courts.
Polanski faces arrest in the United States since pleading guilty to having sex with a 13-year-old girl. He was charged with rape and five other felonies in 1977.
He fled Los Angeles for Paris soon after, fearing that he could face a lengthy prison sentence. The charge to which he pleaded guilty is not an extraditable offense in France.
Kelsey-Fry called the conviction "a most unsightly blot" on Polanski's reputation that would "cause people to think less of him." But, he stressed repeatedly, "That blot is not what this case is about."