Paolo Gabriele, 46, pleaded not guilty to charges of aggravated theft but said he had abused the Pope’s trust.
He said he believed the pontiff was being manipulated, and that he acted alone in copying the sensitive papers.
The files, which revealed allegations of corruption and infighting at the Vatican, were leaked to the media.
Paolo Gabriele was being questioned in court by the president of the Vatican City tribunal. He faces up to four years in prison if convicted, but he could be pardoned by Pope Benedict XVI.
The butler admitted to the court that he was photocopying documents in the Pope’s apartment, but said he did not regard this as a crime.
There has been speculation that the butler had accomplices as he set about leaking the Vatican’s secrets.
But he insisted in court that he had acted alone, adding that he had “many contacts” in the Vatican where he said there was “widespread unease”.
Paolo Gabriele also complained of the conditions he endured for weeks in a tiny Vatican cell after his arrest. He said it was so small that he could not extend his arms, and the light was kept on 24 hours a day.
The judges have ordered an inquiry into Paolo Gabriele’s allegations. However, the Vatican said conditions inside the Vatican police’s security room respected minimum international standards.
This is the second day of the trial. It was adjourned last week after Vatican judges refused to admit evidence gathered by cardinals.
Instead, the judges in the high-profile trial said they would rely only on evidence from the Vatican police and prosecutor. They seized 82 boxes of papers from Paolo Gabriele’s home.
The Pope’s private secretary, Georg Gaenswein, and one of the four German and Italian nuns who work in the 85-year-old pontiff’s household are also expected to testify.
Correspondents say their testimony could shed light on the very private world of the household.
The chief judge said the court hoped to reach a verdict by the end of the week.
No TV cameras or recorders are being allowed inside the courtroom for the most high-profile case to be held in the Vatican since it was established as a sovereign state in 1929. Coverage of the trial is restricted to just eight journalists.
Paolo Gabriele was identified as the source of leaked documents that were published in a book by an Italian journalist, Gianluigi Nuzzi, in May.
The documents included private correspondence between senior Vatican figures, and appeared to reveal bitter power struggles and corruption.
Correspondents say the revelations seem aimed primarily at discrediting the Vatican’s powerful Secretary of State, Cardinal Tarcisio Bertone, who has been in his post since 2006.
The Pope ordered cardinals to carry out an inquiry separate to the probe by Vatican police after the scandal broke. The results of their investigation have not been made public.
The court decided that his fellow defendant, Vatican computer technician Claudio Sciarpelletti, will be tried separately for aiding and abetting a crime. He had exerted his right to stay away from the hearing.
Paolo Gabriele was the Pope’s trusted servant for years and held the keys to the papal apartments.
The “Vatileaks” scandal has been one of the most difficult crises of Pope Benedict’s seven-year papacy, correspondents say.
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