The younger brother of the boy accusing Michael Jackson of abuse has told a US court that he twice saw the star molest his brother at his Neverland ranch.
The star watched impassively as he was accused of child abuse
Star Arvizo, 14, also said Mr Jackson plied him and his brother, Gavin, with alcohol, showed them pornography and walked around naked.
Mr Jackson denies 10 charges of child abuse and false imprisonment.
If convicted by the court in Santa Maria, California, he could face up to 21 years in prison.
As his trial entered its second week, Mr Jackson watched from the dock as Star Arvizo became the first key prosecution witness to reveal details of the alleged abuse.
The teenager said that at Neverland in February 2003 he discovered Mr Jackson fondling his brother, then aged 13, while lying on a bed.
He gave an explicit account of encounters he alleges took place in Mr Jackson's mansion.
"I saw Michael's left hand in my brother's underwear and his right hand in his own underwear," the boy told the court.
"He [Jackson] was masturbating. He was rubbing himself."
Star added: "He (Jackson) had his eyes closed.
"I didn't know what to do. I went back to my guest room."
Star, who been welcomed to Neverland with his family while his brother recovered from cancer, told the court he discovered a similar scene two days later.
In earlier testimony, he alleged that Mr Jackson showed the brothers pornographic websites as the singer's young sons slept nearby, and gave them wine in soft drink cans which he dubbed "Jesus juice".
Covers of pornographic magazines - including one called Barely Legal - were projected onto a screen in the courtroom as Star alleged that Mr Jackson showed off a collection of magazines he kept in a suitcase.
He also said the singer whispered into the ear of his sleeping son as he showed the boys a pornographic website: "You're missing some ..." using a vulgar term for female anatomy.
Mr Jackson once walked in front of the boys naked as they watched a movie at Neverland, Star alleged, adding it "grossed out" the two boys.
But the singer allegedly laughed the incident off, describing it as "natural".
Despite this, Star said, the boys were urged not to talk about Mr Jackson's behaviour.
"Michael told us not to tell no-one what we did - not to tell our parents what we did."
He also described how his brother acted "strange" after drinking from a can Star suspected was filled with alcoholic drink.
"He [Gavin] wasn't acting right, he was acting funny. I saw the brim... of his 7-Up can... 7-Up is clear and I saw red on the can," Star said.
Earlier on Monday, Mr Jackson's lawyers questioned Star and Gavin's sister, Davellin, 18, looking for discrepancies to weaken her testimony.
The jury first heard an audio tape, recorded by a private investigator working for Mr Jackson, in which the accuser's family praised the singer, saying he took them in after years of abuse by her mother's ex-husband.
"We had been neglected, rejected, spat on... Michael took us from the line," Gavin's mother, Janet Arvizo, said on the tape, adding she felt her children were "safe" at Neverland.
Davellin Arvizo broke down on the witness stand as she could be heard praising Mr Jackson during the 45-minute tape.
She said that at that point she had "still liked Mr Jackson".
Last week Davellin criticised Mr Jackson, but when questioned by his defence said she had earlier lied about key details in the case.
His defence argues the wealthy pop star is being exploited by a manipulative family over an act of charity.