One witness, who said he was a teenager in Dujail in 1982, said he knows some of those said to have been executed.
"The prosecutor said they were executed but I am telling you I ate with them some time ago" and that 23 of them were alive, said the witness, who had worked at Baghdad's Abu Ghraib prison in the mid-1980s.
Saddam and seven co-defendants are on trial over the deaths of 148 men and teenagers in 1982 in Dujail, after an attempt on Saddam's life led to what the prosecution has termed a massive crackdown on the village.
"Many of them have gotten rich and occupy powerful positions," said the witness, testifying from behind a curtain.
"Around 23 of those who were mentioned among the 148 are still alive, and I know most of them," suggesting that the survivors fled abroad after the attempt on Saddam's life, but returned after he was overthrown in 2003.
A second witness, a shepherd from Dujail, also said many of the people that had supposedly been killed were still living.
"This name is supposed to have been executed, but he is now having a son and he has married twice. I was invited to his wedding in May," said the witness, who also testified anonymously.
Judge Rauf Abdel Rahman ordered the claim be investigated.
"If it is true and these people are still alive, this whole case should be reconsidered from the beginning," said the lawyer for Awad al-Bandar, whose revolutionary court under Saddam sentenced the men to death in 1984.
The witnesses also claimed the prosecution's case was built on bribes.
One said chief prosecution Jaafar al-Mussawi attended a 2004 gathering in Dujail looking for witnesses, saying the Iranians would thank them and that any necessary documents could be forged.
But the prosecutor promptly rebutted the allegations.
"I just want to clarify this for the records. I was born in Baghdad and I never went to Dujail. On July 8, 2004, I wasn't a prosecutor, I had nothing to do with the court," said Mr Mussawi.
However Dubai-based news channel Al-Arabiya has since broadcast a video showing Mr Mussawi in Dujail with one of the prosecution witnesses, at an event to commemorate the killings, but did not give a date for the video.
Both witnesses claimed Mr Mussawi was in Dujail, and Saddam defence lawyer Khalil al-Dulaimi announced he had a recording of the event.
Mr Mussawi then called for the next session to be closed to the public -- a request the judge did not immediately address.
The session was adjourned until Wednesday.
Meanwhile one of the defence lawyers told the court that one of their witnesses who testified recently was killed a few days ago, a claim that could not be confirmed.
International human rights advocates say the trial, taking place in Baghdad's highly fortified Green Zone, is being conducted well below international legal standards.