Awlaqi, who holds both Yemeni and US citizenship, and his relative, Othman al-Awlaqi, were both charged in absentia in a Yemeni court with "incitement to kill foreigners and members of security services."
The charges arose during the trial of Hisham Mohammed Assem, who was in the court on Tuesday to face charges of killing French energy contractor Jacques Spagnolo near Saana last month.
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Prosecutors said Awlaqi had corresponded with Assem for months, encouraging him to kill foreigners.
All three men are also accused of "forming an armed gang to carry out criminal acts and to target foreigners and security forces on behalf of Al-Qaeda."
Assem denied the charges, told the court he was tortured and asked for a lawyer.
The trial was adjourned until Saturday.
The court action comes as Yemen is in the spotlight after parcel bombs to the United States were traced to the ancestral homeland of Al-Qaeda leader Osama bin Laden.
Earlier this year US President Barack Obama's administration authorised the targeted killing of Awlaqi.
In a May video posted on the Internet, Awlaqi urged all Muslims serving in the US army to follow the example of Major Nidal Hasan -- an army psychiatrist -- accused of killing 13 comrades at Fort Hood base in Texas last November.
