According to the indictment, Sandor Kepiro took part in the mass killings of some 1,200 Jewish, Serb and Roma civilians in Serbia’s northern city of Novi Sad in January 1942 by fascist Hungarian forces.
He is accused of "complicity in war crimes". Prosecutors said he would be charged with having ordered the rounding up and execution of 36 people.
Kepiro was convicted in 1944 for killings in Hungary but his conviction was quashed by the fascist government and he later fled to Argentina.
He returned to Hungary in 1996 and was tracked down by the Simon Wiesenthal Center as the world's most wanted Nazi war crimes suspect. Serbia had asked his extradition, but the request was turned down by Hungarian authorities.
Kepiro had sued the director of Simon Wiesenthal Center, Efraim Zuroff for defamation, but the case was turned down by a Hungarian court on Tuesday.
One of the survivors of the massacre, Lea Ljubibratic, said people were taken from their houses, shot in the streets and then thrown under the ice of the frozen Danube River.
Kepiro has admitted to being a part of pro-Nazi Hungarian forces which occupied northern Serbian province of Vojvodina in World War Two and carried out a massacre. But he told Hungarian television: I haven’t regretted anything, all I did was my duty.”
He walked into the court with a hand stick and later displayed a scribbling on a piece of paper reading: “Murderers of a 97-year old man!”