It is alleged that between 1987 and 1999 James Forster sent obscene letters to Joanne Kellett, threatened to bomb an elderly neighbour's home and damaged houses and cars.
Teesside Crown Court heard how his alleged campaign of terror was only stopped after his home in the village of Manfield was raided by police.
The court heard how Ms Kellett's ordeal started when she and her family moved next door to Mr Forster in 1989. She was 21 at the time.
He allegedly sent her postcards and letters with graphic pornographic images over an eight-year period, claiming that she was a prostitute.
Ms Kellett told the court she was left feeling frightened and terrorised over a number of years by the hate mail.
Her parents tried to protect her from the vicious correspondence and it was not until she was asked to give a statement to police in November 1999 that she was made aware of the full extent of the campaign.
Police officers showed Miss Kellett a file containing posters, leaflets and letters all intended to discredit her good character.
'Insulting and abusive'
She told the jury: "I found the contents of these letters which were clearly addressed to me as offensive, insulting and extremely abusive."
The court was told that for three years Mr Forster had also terrorised his elderly neighbour Molly Christian, who had sold her home to the Kellett family.
He allegedly threatened to put a bomb down her chimney, glued the locks of her door and scratched the windows of her cottage home.
The court heard that Mr Forster also put about rumours that another man in the village was a busy-body who had "shopped" local members of the community to the police.
Eric Collin told the court that his friendship with Mr Forster had deteriorated after he helped Miss Kellett's father Roy install a security system at his home.
Prior to that he said his relationship with Mr Forster had been civil.
Within a month of the work Mr Collin became the next victim of hate mail which claimed he was "shopping" his friends and neighbours to the police and other authorities.
Posters distributed
The campaign against him continued for six years.
The court was told that 25 other households in Manfield also received letters claiming that Mr Collin had carried out a dirty tricks campaign against his friends and neighbours.
Other posters were distributed around the village claiming that Mr Collin ran a detective agency which he used to spy on his neighbours.
He was shown a list of names which was found in Mr Forster's house and titled "people gossiped about by Collin".
When asked if this was true, Mr Collin told the court: "Certainly not - it was purely a document of mockery to try and create some form of discredit to me as much as possible."
It is also alleged that Mr Forster tried to force the village parish clerk to resign from her post and sent a pornographic magazine to her 13-year-old daughter.
The case continues.