Taylor faces 11 counts of war crimes and crimes against humanity, including sexual slavery, mutilation and sending children into combat, in connection with alleged backing of Sierra Leonean rebels during Sierra Leone's 1991-2002 civil war.
"Most definitely, I'm not guilty," Taylor told Judge Richard Lussick at the court in Freetown.
"Most definitely, I did not and could not have committed these acts against the sister republic of Sierra Leone," he insisted, after the judge read out the 11-count indictment against Taylor.
"I think this is an attempt to continue to divide and rule the people of Liberia and Sierra Leone."
He was remanded in custody to a date yet to be fixed. He did not apply for bail but said he preferred to be tried in Sierra Leone.
It was the first court appearance of the ex-warlord, making him the first former president on African soil to answer charges of crimes against humanity.
Taylor sat pensively during the 55-minute hearing.
He questioned the jurisdiction of the court but said he preferred the trial to take place in Sierra Leone, as the Special Court is seeking to have it moved to The Hague due to security concerns.
"This is the issue regarding this court, its right to exercise jurisdiction over me as the 21st president of the republic of Liberia.
"There are other issues about how I got here," said Taylor before the judge insisted that he had to enter his plea first before raising any motions.
Principal court defender Vincent Nmehielle said Taylor preferred to have the trial take place in the region for easy of logistics.
"He wants to be tried in Sierra Leone and nowhere else," to facilitate his witnesses and family from Liberia to attend, Mr Nmehielle said.
The most feared strongman of the region said he feared for his life in detention and wanted the court to ensure his health and other needs were met.
"The accused wants to inform the court that he fears for his life and therefore would express that as a concern: particularly, according to him, in view of the fact that Mr Foday Sankoh (former Sierre Leonean rebel leader) died in detention while at this court, and also in view of the fact that recently Mr (former Yugoslav President Slobodan) Milosevic died in detention and therefore he fears for his life," Mr Nmehielle said.
He told the court that Taylor will require legal aid as he cannot afford legal representation.
If convicted Taylor faces a lengthy prison term, but there is no death penalty, according to court officials.
The actual trial is not expected to begin for months at least, as the court has said it wants the proceedings moved to The Hague. It has also cited lack of adequate space this year at the courthouse in Freetown.
There are fears that the trial could ignite renewed unrest in the region, where Taylor is believed to still command widespread backing.
Taylor, 58, is considered the single most powerful figure behind a series of civil wars in Liberia and neighbouring Sierra Leone between 1989 and 2003, which between them left around 400,000 people dead.
Faced with a rebellion at home, Taylor stepped down from power in August 2003 following mediation by Nigerian leader Olusegun Obasanjo, who gave him temporary asylum until last week when under intense international pressure he agreed to return him to Liberia.
Taylor tried to escape but was caught before he could leave the country.