Separately, former Bosnian Serb President Biljana Plavsic - convicted of war crimes - has been released.
Plavsic was the highest ranking official from the former Yugoslavia to have pleaded guilty for her part in the Bosnian War. She was sentenced in 2003 to 11 years in a Swedish jail.
But a Swedish court has allowed her early release for good behaviour.
'Hatred and fear'
At The Hague, Mr Karadzic, 64, faces two charges of genocide and nine more of war crimes and crimes against humanity.
The former president of Republika Srpska, head of the Serbian Democratic Party (SDS) and commander of the Bosnian Serb Army has refused to enter pleas, but has said he will co-operate with the court to prove his innocence.
In opening remarks at his trial, the prosecution labelled him the "undisputed leader" of Serbs responsible for carrying out atrocities during the 1992-1995 conflict.
"This case is about that supreme commander, a man who harnessed the forces of nationalism, hatred and fear to implement his vision of an ethnically separated Bosnia: Radovan Karadzic," prosecutor Alain Tieger said.
Mr Karadzic had "ethnically cleansed vast portions of Bosnia and Hercegovina" during the war, Mr Tieger said, describing him as a "hands-on leader who maintained direct contact".
"In the course of conquering the territory that he claimed for the Serbs, his forces killed thousands of Bosnian Muslims and Croats, imprisoned thousands more in squalid and brutal camps and detention facilities, and forced hundreds of thousands away from their homes," the prosecutor said.
Mr Tieger said that as well as witness testimony, some of the evidence against Mr Karadzic would come from intercepts of his own phone calls and transcripts of his speeches.
He quoted Mr Karadzic as saying before the war that Serb forces would turn the Bosnian capital, Sarajevo, into "a black cauldron, where 300,000 Muslims will die".
Mr Tieger said witnesses who survived the long siege of Sarajevo would describe living "in constant fear, day after day, for years, knowing that they or their loved ones were targets".
Announcing the court's decision to proceed in his absence, Judge O-Gon Kwon said Mr Karadzic had chosen not to exercise his right to be present and "must therefore accept the consequences".
Eleven counts of genocide, war crimes, crimes against humanity and other atrocities
Charged over shelling Sarajevo during the city's siege, in which some 12,000 civilians died
Allegedly organised the massacre of up to 8,000 Bosniak men and youths in Srebrenica
Targeted Bosniak and Croat political leaders, intellectuals and professionals
Unlawfully deported and transferred civilians because of national or religious identity
He said the court would consider imposing a lawyer to represent Mr Karadzic if he continues to boycott proceedings.
Mr Karadzic is not due to give his opening argument until next week.
His legal counsel in Belgrade said he would reject any counsel imposed by the court.
Another of his legal advisers, Kevin Jon Heller, said that from the scope of the trial - thought to include 1.2 million pages of evidence, numerous crime scenes and hundreds of witness - it was understandable why Mr Karadzic, who is not a trained lawyer, had stayed away.
Mr Karadzic was taken to the International Criminal Tribunal for the former Yugoslavia (ICTY) in The Hague last year, after 13 years in hiding.
He was indicted in 1995 on two counts of genocide and a multitude of other crimes committed against Bosnian Muslim, Bosnian Croat and other non-Serb civilians during the 1992-1995 war, which left more than 100,000 people dead.
The charges relate to several events, including the campaign of shelling and sniper attacks on Sarajevo during the 44-month siege of the city, in which some 12,000 civilians died.
The BBC's Ben Brown: 'The judges fear he is just trying to delay proceedings'
Mr Karadzic is also accused of being behind the massacre of more than 7,000 Bosniak (Bosnian Muslim) men and youths in Srebrenica in July 1995, and of attacks on more than a dozen Bosnian municipalities in the early stages of the war.
He faces a maximum sentence of life in prison if convicted.
Correspondents say the judges want to complete the trial by 2012, conscious that the trial of former Yugoslav President Slobodan Milosevic ended without a verdict after four years when he died in custody.
Prosecutors have abbreviated the scale of their case, and will call fewer witnesses and include alleged crimes in fewer locations.
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