Mr Martic, first of the former leaders of the rebel Serbs' wartime state within Croatia to go on trial before the UN war crimes tribunal, is accused of crimes against humanity and of violations of the laws and customs of war.
The charges include ordering rocket attacks on civilians in the Croatian capital Zagreb in 1995 in which at least seven people were killed and many more were wounded.
Mr Martic, who surrendered to the UN tribunal in 2002 and has pleaded not guilty to all charges, has always said the long-range weapons were aimed at military targets.
Ethnic cleansing
"The case is simple and straightforward," prosecutor Alex Whiting said in court.
The goal was to "rid the planned Serb state of Croats and others non-Serbs that resided there", Whiting claimed, adding "this was achieved by ethnic cleansing".
Residents were detained, beaten, tortured and murdered, and their properties looted and destroyed so they had no home to return to, Mr Whiting alleged.
Martic maintains innocence
After the prosecution's statement, Mr Martic was allotted time to speak.
"Everything in the indictment except for my name is erroneous. All I did was protect the citizens of Serb Krajina regardless of where they were from", said Mr Martic, 49.
Mr Martic led the opposition of the largely Serb Krajina region to Croatian independence from Yugoslavia from 1991.
He was appointed president of a self-proclaimed Serb republic in Croatia in 1994.
"Until I prove my innocence there is no freedom that would suit me,"
Mr Martic said.