Cristina, a 50-year-old mother-of-four with a master's degree from New York University, is the first Spanish royal to face criminal charges in court since the monarchy was reinstated following the 1975 death of dictator General Francisco Franco.
The trial of the princess and the 17 other accused, including her husband, former Olympic handball medallist Inaki Urdangarin got underway at 9:20 am (0815 GMT) at a makeshift courtroom in Palma on the palm-lined Mediterranean island of Mallorca, where the Spanish royals have a holiday home.
But following courtroom rules, they had to sit apart as judges read out the alleged crimes committed by the suspects.
Cristina has been charged with tax evasion while her husband is accused of the more serious crimes of embezzlement, influence peddling, document falsification, money laundering and tax fraud.
Journalists from around the world have flocked to cover the trial, which was moved from a courthouse to a public administration school on the outskirts of Palma to accomodate the large number or reporters and lawyers.
"We have never had as much corruption in Spain's democratic history," said Francisco Solana, a 45-year-old unemployed masseur who protested outside the makeshift courtroom before the start of the trial.
"No judge will dare send Princess Cristina to jail. I think justice is not equal for all, it favours the rich," added Solana who was wrapped in a yellow, red and purple Spanish Republican flag.