Cypriot-born Efraim, 56, chief of the Vatopedi Monastery at the monastic community of Mount Athos, is accused of inciting officials to commit acts of fraud, perjury and money-laundering, a charge that can fetch him a jail term of several years.
The government is said to have lost tens of millions of euros in a series of land swaps with Vatopedi, a monastery with many prominent fans inGreece and abroad including Britain's Prince Charles, who is a frequent visitor.
Exposure of the scandal precipitated the fall of the country's then conservative government in 2009.
Efraim, born Vassileios Koutsou, denies all charges. He was put behind bars at Greece's biggest prison, Korydallos in Athens.
Greece has being plagued by chronic corruption, one reason for the weak state of its finances that led to its debt crisis. Several top politicians were said to have been involved in a string of scandals in the past.
Greek lawmakers have investigated three former government ministers over Vatopedi. But the case against them was dropped because it fell under a statute of limitations. An investigation continued into monks and other public officials.
Efraim had been under house arrest at his monastic cell in Vatopedi since Saturday. He had returned from a relic-display fund-raising tour in Russia, where he met the country's leader Vladimir Putin. His arrest caused an outcry among religious and conservative circles in Athens and Moscow.
"They rushed Efraim to jail on Christmas Eve while others who have embezzled Greek people's money remain at large," said George Karatzaferis, leader of the far-right LAOS party which is part of Greece's coalition government.