Gillian Gibbons, in a dark jacket and blue skirt, was not handcuffed when she walked into the courtroom in Khartoum, according to reporters inside the courthouse.
Media were then promptly ordered out of the courtroom itself but were allowed to remain inside the building.
The case set up an escalating diplomatic dispute with Britain , Sudan's former colonial ruler. If convicted, Gibbons faces up to 40 lashes, six months in jail and a fine, Sudanese officials have said, with the verdict and any sentence up to the "discretionary power of the judge."
Prosecutor-General Salah Eddin Abu Zaid told The Associated Press earlier Thursday that the British teacher can expect a "swift and fair trial" under the Sudanese judicial system and that she had been provided with a legal defense team, as well as a private cell, mattress and blanket in detention.
"We don't think this will be a long trial, because there is only one article of the penal code to handle," Abu Zaid said.
Prosecutors have previously said Gibbons, 54, was being charged under article 125, under charges of inciting religious hatred.
The country's top Muslim clerics pressed the government to ensure that she is punished, comparing her action to author Salman Rushdie's "blasphemies" against the Prophet Muhammad.
The charges against Gibbons angered the British government, which urgently summoned the Sudanese ambassador to discuss the case. British and American Muslim groups also criticized the decision.
Gibbons was arrested at her home in Khartoum on Sunday after some parents of her students accused her of naming the bear after Islam's prophet. Muhammad is a common name among Muslim men, but the parents saw applying it to a toy animal as an insult.
Abu Zaid said that he met with Gibbons on Wednesday and that "the lady was fine."
Sudanese court system is notoriously slow but he promised fast proceedings. Also, jail conditions can be extremely poor but Abu Zaid stressed Gibbons had been provided with "all services," including a team of attorney as and translators as well as a bed and mattress in private cell.
However, a British embassy spokesman, Omar Daair told The AP that it was Gibbons' school which had provided the defense and the translators for her.
Officials in Sudan's Foreign Ministry have tried to play down the case, calling it an isolated incident and predicting Gibbons could be released without charge.
But hard-liners have considerable weight in the government of President Omar al-Bashir, which came to power in a 1989 military coup that touted itself as creating an Islamic state.
The north of the country bases its legal code on Islamic Sharia law, and al-Bashir often seeks to burnish his religious credentials.
Last year, he vowed to lead a jihad, or holy war, against U.N. peacekeepers if they deployed in the Darfur region of western Sudan. He relented this year to allow a U.N.-African Union force there - but this month said he would bar Scandinavian peacekeepers from participating because newspapers in their countries ran caricatures of Prophet Muhammad last year.
Officials at Unity High School, where Gibbons taught, say she was teaching her 7-year-old students about animals and in September asked one girl to bring in her teddy bear. Gibbons then asked the students to pick names for the bear and they voted to name it Muhammad.
Each student then took the bear for a weekend to write a diary entry about what they did with the bear, and the entries were compiled into a book with the bear's photo on the cover and the title "My Name is Muhammad," in what teachers in Britain said was a common exercise.
The school, founded in 1902 to provide British-style education to about 750 students from elementary through high school, has been closed since Gibbon's arrest. Most students are Muslims from affluent Sudanese families.
In Britain, the Gibbons family declined to speak with The Associated Press, saying the British government had advised them not to comment.
In Khartoum, the British Embassy said that diplomats were allowed to visit Gibbons on Wednesday and that she was being treated well.
Sudan's top clerics, known as the Assembly of the Ulemas, said in a statement Wednesday that parents at the school had handed them a book that the teacher was assembling about the bear.
The assembly, a semiofficial body generally viewed as moderate and close to the government, called on authorities to apply the full measure of the law against Gibbons. It called the incident part of a broader Western "plot" against Muslims.
Gibbon's case started Thursday for the first time to make headlines in Sudanese papers, with most articles echoing the angry statements by the ulemas.