Mladic, the military commander during the 1992-95 Bosnian war is accused of genocide, murder, acts of terror and other crimes against humanity.
He was in charge of the Bosnian Serb army when, over two nights in July 1995, its fighters shot 8,000 Muslim men and boys in and around the town of Srebrenica in eastern Bosnia, burying most in mass graves.
It was Europe's worst mass killing since the Holocaust and part of a war that left around 100,000 people dead.
Mladic, now 70, was seen clapping his hands and flashing a thumbs-up sign as he entered the courtroom at the Yugoslav war crimes tribunal at The Hague.
He later made eye contact with a woman in the public gallery and ran his hand across his throat, in a gesture that led presiding judge Alphons Orie to hold a brief recess and order an end to "inappropriate interactions."
Sky's foreign affairs correspondent Lisa Holland said: "Clearly he is a man who shows no contrition whatsoever for his years as a Bosnian Serb military leader.
"He denies any wrongdoing at all. And that simple act of defiance, that sense of him being there and absolutely having no empathy for those relatives in court, waving as his own supporters... clearly even after all these years, two decades after the start of the Bosnian War, he still sees himself as a saviour of Serb nationalism."
Prosecutor Dermot Groome told the judges at the court: "Ratko Mladic assumed the mantle of the criminal goal of ethnically cleansing Bosnia."
He began his opening statement by focusing on the plight of a 14-year-old boy whose father and uncle were among 150 men murdered by Bosnian Serb forces in November 1992.
"The world watched in disbelief that in neighborhoods and villages within Europe a genocide appeared to be in progress," he said.
"By the time Mladic and his troops murdered thousands in Srebrenica... they were well-rehearsed in the craft of murder," Groome told the court.
Judges were shown a video of the aftermath of a notorious shelling of a market in Markale, in the Bosnian capital Sarajevo, that killed dozens of people.
Mr Groome said all the attacks were part of an "overarching" plan to ethnically cleanse parts of Bosnia of non-Serbs.
Prosecutors will present evidence, including Mladic's own wartime diaries, that demonstrate, "beyond reasonable doubt the hand of Mr. Mladic in each of these crimes," he said.
The trial is expected to last three years with testimonies from some 400 witnesses, including 128 in person.
Outside the courtroom was a protest by around 25 members of the 'Mothers of Srebrenica', an organistion representing widows and victims of the Srebrenica massacre.
"This is the biggest butcher of the Balkans and the world," said 65-year-old Munira Subasic, who watched the opening of the trial from the public gallery.
"I'll look into his eyes and ask him if he repents."
She lost 22 relatives to Bosnian Serb military forces when the enclave of Srebrenica was overrun in July 1995.
Kadefa Mujic, another member of the group, added: "Victims are afraid that Mladic could die, and that would be very disappointing for the victims in Bosnia.
"I want a verdict for Mladic so that the whole world will see that he is a war criminal and has committed the crimes in Bosnia."
For years after the war Mladic was an elusive fugitive and one of the world's most-wanted men.
His time on the run finally ended last year when Serbian forces arrested him near Belgrade and flew him to The Hague.
He has been held in the same jail as his former political leader, Radovan Karadzic, who was arrested in 2008 and is now at the midway point of his own trial on almost identical charges.
Chief prosecutor Serge Brammertz said: "I don't have to tell you how important it is that finally this trial can start 17 years after the first indictment was issued (against Mladic)."
Mr Brammertz said: "We would of course have preferred having both before the same judges, one being the political architect of the crimes allegedly committed, the other the military leader of this policy."
Both men are accused of overseeing atrocities that began with a brutal campaign of ethnic cleansing in 1992 and climaxed with the July 1995 Srebrenica massacre.
They also are charged with the deadly campaign of sniping and shelling during the 44-month siege of the capital, Sarajevo.
The man seen as the overall architect of the Balkan wars of the 1990s, former Yugoslav President Slobodan Milosevic, died in 2006 before tribunal judges could deliver verdicts in his trial.
Mladic has pleaded not guilty to the charges, calling them "obnoxious" and "monstrous". He claims he was only defending his country and his people.