Defence lawyers have labelled the tape as a fake
The videotape was received by American diplomats a month after the Wall Street Journal reporter disappeared in Karachi in January while chasing a story.
Defence lawyers rejected the tape as a fake.
They said the four men accused of the kidnap and murder of the journalist sat unmoved as the three-minute video showed Mr Pearl's throat being slit.
The four men, who include British-born Islamic militant Ahmed Omar Saeed Sheikh, face the death penalty if convicted.
Manipulated
Defence lawyers had raised objections to the screening of the tape.
But the court rejected their pleas and allowed the prosecution to show the tape.
The judge, lawyers from both sides and the four accused viewed the tape three times in a room outside the anti-terrorism court.
Defence lawyers alleged that the videotape was manipulated using computers.
"It was like watching a movie, like X-files or Pearl Harbour", defence lawyer Rai Bashir told the Associated Press.
Trial
Abdel Waheed Katpar, who is the lawyer for the main accused Omar Sheikh, said the courtroom was silent during the screening "but for a sudden outburst from someone who said they are making a mountain out of a molehill."
The chief prosecutor, Raja Qureshi, refused to comment on either the tape or the reaction in the court.
Earlier, FBI agent John Folgon testified that he had helped Pakistani investigators trace e-mails which threatened to kill US nationals in Pakistan.
He was the second FBI agent to testify in the case after Ronald Joseph told the court on Saturday how he had traced two key e-mails to one of the accused.
The hearing is likely to continue on Wednesday.