The charges relate to the country’s civil conflict that erupted after Mr Gbagbo lost elections in 2010.
He is the first ex-head of state to stand trial at the ICC in The Hague.
Former militia leader, Charles Ble Goude, 44, is also on trial and pleaded not guilty to the charges.
The trial could last three or four years.
As it began, Mr Gbagbo, 70, appeared relaxed, smiling and shaking hands with his defence team.
The BBC’s Anna Holligan, at the trial, said he steadied himself on his desk as he replied “not guilty”.
One of his advisers, Abdon Bayeto, earlier told the BBC that Mr Gbagbo’s innocence was not in doubt.
He said: “There’s been a parody of justice here. Somebody who has been in prison for five years with no proof.”
A key test, by Anna Holligan, BBC News, The Hague
This may prove to be the most important trial in the ICC’s history. The international court was established to end impunity and bring the most powerful leaders to justice. The first trial of a former head of state is testament to the prosecutor’s reach. And yet, despite casualties on both sides, not one of President Alassane Ouattara’s supporters has been charged, leading to accusations of victor’s justice.
During the pre-trial press briefing the victims’ representative was asked how she could represent the victims when only half of those who suffered would have their voices heard.
This high-profile trial will test the ability of the ICC to obtain reliable evidence from a country in which the government has a political interest in securing a guilty verdict.
Can the suspects expect a fair trial if much of the evidence comes from their enemy?
A lawyer for Mr Ble Goude, who is accused of organising attacks on opposition supporters, described his client as a “man of peace”.
Mr Gbagbo sparked a crisis in Ivory Coast after he refused to step down following his loss to Alassane Ouattara in the 2010 presidential vote.
There were bloody clashes between rival forces over five months in 2010 and 2011.
Some 3,000 people were killed, with Mr Gbagbo holing up in the presidential palace.
He was arrested in April 2011 by forces loyal to President Ouattara, backed by troops from former colonial power France, and later that year was extradited to The Hague.
It will be the highest-profile trial yet for the ICC, which has only convicted two Congolese warlords since its establishment in 2002.
Mr Gbagbo and Mr Ble Goude are accused of four charges – murder, rape, attempted murder and persecution.
Dozens of Gbagbo supporters gathered outside the ICC on Thursday to back the ex-president, sparking some scuffles with police.
“Our dream to see our president walk free starts today,” said one supporter, Marius Boue. “He is truly a man of the Ivorian people.”
Other supporters gathered in the Gbagbo stronghold of Youpugon in Ivory Coast’s commercial capital, Abidjan, to follow the trial.
Mr Gbagbo’s followers accuse the ICC of overlooking alleged crimes by his opponents, many of whom are now in power.
But this was rejected by ICC Chief Prosecutor Fatou Bensouda, who said investigations into the pro-Ouattara camp had been “intensified”.
Born in 1945, Mr Gbagbo’s first career was in academia as a history professor
He was jailed for two years in 1971 for “subversive” teaching
By the 1980s, he was heavily involved in trade union activities
After years in exile, he returned to Ivory Coast to attend the founding congress of the Ivorian Popular Front in 1988
Mr Gbagbo was one of the first to challenge Ivory Coast’s founding President Felix Houphouet-Boigny, after multi-party politics were permitted
Became president with the Ivorian Popular Front in 2000
Profile: Laurent Gbagbo
Mr Gbagbo is the first ex-head of state to appear at the ICC, although Liberia’s former President Charles Taylor also stood trial at The Hague.
He appeared before the Special Court for Sierra Leone and was given a 50-year jail sentence in 2012 on charges of aiding and abetting war crimes during the civil war in Sierra Leone, which neighbours Liberia.
The ICC has been accused by some in Africa of unfairly targeting the continent.
An attempt to prosecute Kenyan President Uhuru Kenyatta over post-election violence failed amid allegations witnesses had been intimidated.
This week however the ICC authorised an investigation into possible war crimes committed during the 2008 conflict between Russia and Georgia – the first inquiry into a conflict outside Africa.
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