Mr Muhammad, 41, faces murder and terrorism charges in connection with the three-week shooting spree around the US capital last month which left 10 people dead and three wounded.
In another court in Virginia, Mr Muhammad's alleged accomplice - 17-year-old John Lee Malvo was remanded in custody in his first hearing since being handed over to state authorities from government custody.
The two suspects will face separate trials for different murders, but prosecutors said they may rely on evidence from any or all of the attacks around Washington DC, and crimes across the country which have now been linked to the men.
US Attorney General John Ashcroft released the pair from federal custody on Thursday after deciding they should first face trial in Virginia - where both may face the death penalty - rather than Maryland which saw more deaths but does not execute juveniles.
Shackled and wearing orange prison overalls, Mr Muhammad stood throughout the five-minute hearing in Prince William County where he had been charged with the killing on 9 October of Dean Meyers, 53, who was shot at a petrol station.
Correspondents say he spoke in a controlled and deliberate manner as he discussed briefly with Circuit Court Judge Herman Whisenant Jr whether he wanted a lawyer appointed.
Escape attempt
In another court less than 15 miles (25 kilometres) away, Mr Malvo was ordered to be held at an adult detention centre after a prosecutor said the teenager had been seen near three shooting scenes in Virginia.
Fairfax County prosecutor Robert Horan also said Mr Malvo tried to escape while he was in federal custody in Baltimore by breaking through a ceiling and climbing away before falling into a nearby office.
Federal authorities have not mentioned Mr Malvo by name, but have said that a "juvenile" will face capital murder charges in the 14 October shooting of FBI analyst Linda Franklin outside a home improvement store.
The two suspects were arrested on 24 October as police hunted for the gunmen who had terrorised Washington and its suburbs.
A rifle found in their car was also linked to murders in Alabama, Louisiana and Georgia.
Paul Ebert, prosecutor in Prince William County, said other crimes were likely to be included in the case against Mr Muhammad.
"I anticipate before this case is over, almost all these murders will play a role in the evidence," he said.
But both he and Mr Horan warned that it could be months before either trial begins.