"Based on our initial impressions, everything points to a successful appeal by the federal prosecutors," presiding judge Klaus Tolksdorf of the Federal
Criminal Court in the south-western German city of Karlsruhe said.
Motassadeq, a 32-year-old Moroccan, was sentenced to seven years in jail by a German court last August after being found guilty of belonging to a terrorist organisation.
But the court in the northern port city of Hamburg acquitted him of abetting the murder of more than 3,000 people in New York's World Trade Center, the Pentagon outside Washington, and a field in rural Pennsylvania.
Federal prosecutors appealed the verdict seeking a new trial and a conviction on both charges, while defence lawyers filed an appeal for an acquittal.
Motassadeq was released from prison in February pending the appeal.
Hearings began on Thursday.
If prosecutors succeed in winning a new trial, it would mark Motassadeq's third time in the dock.
The former electrical engineering student and father of two was a friend of the three hijackers from the so-called Hamburg cell led by Mohammed Atta, but has denied any prior knowledge of the plot to attack the United States.
Judge Tolksdorf said that an initial review of the Hamburg court's decision indicated that although Motassadeq might not have been aware of the exact plan of attack on September 11, he knew as early as November 1999 that the plot involved hijacking planes and using them as missiles in a deadly assault.
"He accepted that," Judge Tolksdorf said.
At his first trial, Motassadeq was sentenced to 15 years in jail in 2003 for abetting the murder of more than 3,000 people in the suicide hijackings and for belonging to a terrorist organisation.
He was the first person to be convicted for playing a role in the attacks, but that verdict was overturned by federal judges in March 2004 on the grounds that US authorities had refused to allow the court to question top Al-Qaeda suspects being held in US custody.
In his retrial, the court found there was no evidence to show that Motassadeq had been directly involved in the attacks in New York and Washington.