The 31-year-old centre back is charged with a racially-aggravated public order offence - an allegation he denies.
It relates to a comment allegedly made to the QPR defender when the teams clashed at Loftus Road last October.
The trial, set to last five days, is at Westminster Magistrates' Court.
If found guilty, the maximum sentence Mr Terry could receive is a £2,500 fine.
John Terry was allowed out of the dock into the well of the court to view footage of the alleged insult.
The court heard that the Chelsea captain maintains he was only sarcastically repeating words that Mr Ferdinand wrongly thought he had used, during the match which was broadcast to millions of people.
The prosecutor, Duncan Penny said: 'The Crown's case is that the words were abusive and insulting in a straightforward sense.
'They were uttered by the defendant in response to goading by Mr Ferdinand on the issue of his extra-marital affair, rather than by way of exaggerated and instant querying of a perceived false allegation.'
Two television clips and footage that had not been broadcast of the incident, which would normally be used for training purposes, were shown to the court.
The court was told that Mr Ferdinand said something about the Chelsea captain's alleged affair and made fist gestures, before John Terry replied.
The skipper's team-mates John Mikel Obi and Ashley Cole were nearby when insults were traded, but they will not be called as witnesses as part of the prosecution case.
Police questioned the Chelsea captain under caution in November 2011 after a complaint from a member of the public after the Premier League match.
As a summary offence under the Crime and Disorder Act, the trial will be fully dealt with in a magistrates' court, with no jury, and is being heard by Chief Magistrate Howard Riddle.
July 9, 2012.
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