Allegations against the witness, who is in her 70s, and cannot be identified, have been made by seven former pupils at Termonbacca home for boys and girls.
She is the first nun to give evidence to the Historical Institutional Abuse Inquiry (HIA).
It was set up to investigate allegations dating from 1922 to 1995.
The inquiry heard on Wednesday that the nun and another member of the Sisters of Nazareth order looked after more than 50 boys at the home in the late 1950s.
Local authority homes:
• Lissue Children's Unit, Lisburn
• Kincora Boys' Home, Belfast
• Bawnmore Children's Home, Newtownabbey
Juvenile justice institutions:
• St Patrick's Training School,  Belfast
• Lisnevin Training School, County Down
• Rathgael Training School, Bangor
Secular voluntary homes:
• Barnardo's Sharonmore Project, Newtownabbey
• Barnardo's Macedon, Newtownabbey
Catholic Church-run homes:
• St Joseph's Home, Termonbacca, Londonderry
• Nazareth House Children's Home, Derry
• Nazareth House Children's Home, Belfast
• Nazareth Lodge Children's Home, Belfast
• De La Salle Boys' Home, Kircubbin, County Down
The inquiry heard the nun had no formal training in childcare.
Seven former residents have accused her of a variety of physical offences, including hitting them when they wet the bed.
She denies all the allegations.
Two more nuns are due to give evidence to the enquiry on Wednesday afternoon.
The HIA is examining abuse claims in NI's children's homes and juvenile justice institutions.
It is investigating claims of physical, sexual, and emotional abuse, as well as childhood neglect.
It began hearing evidence in January.
The public hearings stage of the inquiry is being held in Banbridge, County Down, and is expected to last for 18 months.
During that time, it is due to hear evidence from more than 300 witnesses, including former residents who claim they were abused as children, the people who ran the institutions, health and social care officials and government representatives.
The inquiry's remit is limited to children's residential institutions in Northern Ireland.
So far, it is examining claims against 13 children's homes and borstals.
A nun who worked at a children's home in Londonderry has denied the physical, emotional and psychological abuse of children in her care.