Najib and his wife, Rosmah Mansor, were barred from leaving Malaysia after his decade in power ended in a shock election defeat in May, and the new prime minister, Mahathir Mohamad, relaunched an investigation into 1Malaysia Development Berhad (1MDB).
Dressed in a grey suit, Najib appeared calm as three charges of money laundering were read out at the Kuala Lumpur high court. He pleaded not guilty, and was granted bail.
Najib has also pleaded not guilty to three charges for criminal breach of trust and one charge for abuse of power that were leveled against him last month.
The money laundering charges relate to electronic transfers amounting to 42 million ringgit ($10 million) from SRC International, a former 1MDB unit, into Najib's personal bank account.
The offence carries a penalty of up to 15 years in jail and a fine of not less than five times the value of the proceeds of any illegal transfers, or five million ringgit, whichever is higher.
Najib was accompanied by his children as he arrived at the courthouse in a four-car motorcade. He left after the proceedings without speaking to the media.
"SRC, at the time of the so-called happening, was no longer a part of 1MDB. So it's got nothing to do with 1MDB," Najib's lawyer Muhammad Shafee Abdullah told reporters outside the court.
SRC, created in 2011 by Najib's government to pursue overseas investment in energy resources, was a unit of 1MDB until it was moved to the finance ministry in 2012.
When asked if he thinks the case was a witch hunt, Shafee said, "My client and I hope that's not the case."
High Court Judge Mohamad Nazlan Mohd Ghazali said a decision on when the trial begins, and on a gag order issued last month to stop public discussion of the case, would be made on Friday.
The scandal at 1MDB fully erupted in 2015 after media reports that hundreds of millions of dollars from 1MDB were diverted to his personal accounts.
Najib has consistently denied any wrongdoing, maintaining that those funds were donations from a Saudi royal, and that the bulk of them had been given back.
Reopening the investigations into 1MDB after Najib lost power, Malaysian anti-graft officers have revealed how their earlier investigations were obstructed by Najib's government.
SRC has been the initial focus of Malaysian investigators as all the suspicious transactions involving it went through Malaysian entities, unlike other 1MDB-related transactions that went through foreign banks and companies.
Money allegedly siphoned off from SRC represents only a small fraction of the billions of dollars misappropriated from 1MDB, according to lawsuits filed in the US courts by the Department of Justice, which investigated the scandal.