Lutz Bachmann, 43, is accused of inciting racial hatred in Facebook posts, in which he called refugees "cattle", "scumbags" and "filth".
Pegida's rallies have attracted thousands of supporters in Germany.
Separately, police arrested five suspects near Dresden accused of attacking migrant hostels and plotting far-right, anti-immigrant terror.
Tuesday's police raid in Freital, involving a GSG9 anti-terror unit, was not linked to the trial.
Investigators suspect four men and a woman, aged from 18 to 40, of far-right violence against migrants. Three other men were arrested last November.
The group is suspected of targeting refugee accommodation in Freital and a left-wing housing project in Dresden with explosive devices in attacks last autumn. Investigators found a cache of banned firecrackers considered so dangerous that the group is suspected of attempted murder.
The group is also linked to attacks on a left-wing councillor's car as well as a party office in Dresden.
Interior Minister Thomas de Maiziere said authorities had dealt a "powerful blow to a regional right-wing terrorist group".
Lutz Bachmann's trial was being held amid tight security in Dresden. The Pegida founder claims it is politically motivated and wore large, rectangular dark glasses in an apparent swipe at German censorship rules.
Outside court, supporters held banners reading "Shame on you! Acquit Bachmann" while opponents shouted "Bachmann behind bars".
The movement has spread to numerous countries since its launch in the eastern German city in 2014.
There were 1,005 attacks on refugee homes in Germany last year - five times more than in 2014.
Mr Bachmann has several previous convictions and has served time in jail before. In 1998 he was sentenced to three years and eight months for several burglaries, but he then fled to South Africa.
After extradition, for an invalid visa, he served 14 months in jail in Dresden. In 2010 he was given a two-year suspended sentence for possession of cocaine.
Pegida was prominent in demonstrations in Cologne in January after numerous complaints of sexual assaults against women in the city on New Year's Eve.
The attacks were largely blamed on people from North Africa who entered Germany illegally or have sought asylum. No trials involving suspects from the Cologne assaults have taken place.
Pegida's anti-immigration demonstrations have often been met by counter protests.
The court says Mr Bachmann "disrupted public order" through his comments, which constituted an "attack on the dignity" of refugees.
If found guilty, he could face between three months and five years in prison.

The Duke of Rothesay, as he is known when in Scotland, attended the event in his role as chieftain.
He watched traditional Highland games competitions such as the three-legged and egg and spoon races. He then presented a trophy to the winning tug o'war team.
About 400 people attended the games on Saturday.
It is usually staged in a field nearby to Castle Mey, the late Queen Mother's Scottish home in Caithness, but was instead held at a field in John O'Groats due to the usual setting being water-logged.
Prince Charles drove to the event himself and was wearing traditional Scottish dress.
He appeared to be in high spirits whilst watching a mock horse dressage with participants prancing around on a wooden hobby-horses.
The founder of Germany's anti-Islamist Pegida movement has gone on trial in Dresden on hate speech charges.
[NEXT_CONCEPT]
Prince Charles has umpired a tug o'war competition during a visit to the Mey Highland Games.