He insisted that Enron was a successful and vibrant company that was undermined by a market panic partly sparked by several Wall Street Journal articles⁴ in October 2001. Monday, Paul E. Steiger, the Journal's managing editor, said the paper's reporters "were leaders in uncovering the accounting scandal at Enron. We are proud of our work."

Watching the repercussions of Enron's demise on thousands of employees who were laid off was "very painful," Mr. Skilling said, shaking his head. "It was unbelievable. Unbelievable." While Mr. Skilling said he did nothing wrong at Enron, he did feel a "responsibility" as one of the company's leaders for what had happened. "You wanted to die," he said.

Mr. Skilling's performance on the stand could be a key to the case. The federal indictment against the two men portrays him as the leader of an alleged conspiracy, beginning in the late 1990s, to hide Enron's growing financial problems, which culminated in the company's bankruptcy filing in December 2001.

A sketch of Jeffrey Skilling testifying Monday at the trial in Houston.

The former Enron president has been portrayed as the alleged ringleader, even though Mr. Lay was Enron's chief executive, except for a six-month period in early 2001, when Mr. Skilling held the post. Mr. Lay reassumed the post of CEO when Mr. Skilling unexpectedly resigned from Enron.

Mr. Skilling also is considered a particularly important witness because of questions about how well he will handle government cross-examination. At Enron, Mr. Skilling was known as an intense and driven executive. While some colleagues and observers appreciated his obvious devotion to the company, others found him abrasive, arrogant and dismissive. If jurors come away with that latter impression, it could hurt the defense's cause.

Early in his testimony, Mr. Skilling sat with his hands in his lap, often appearing subdued, sometimes halting to search for the words he wanted to say.

As his testimony continued, he seemed to relax. He began gesturing more with his hands and looking more frequently at the jurors -- as if he was getting back into the mode of his Enron days, when he could talk smoothly for hours about his plans to make the company a dominant force, not just in the world of energy but in the world.

Mr. Petrocelli didn't begin the questioning of his client with inquiries about Mr. Skilling's biography or Enron's glory years. Instead, the attorney focused initially on a more painful period, beginning with Mr. Skilling's August 2001 resignation and culminating with the public crisis that enveloped Enron in October of that year. This approach addressed two questions that could potentially hurt the defense: Why did Mr. Skilling quit as Enron's chief executive only six months after getting the job? And why did a giant company, which Mr. Skilling Monday again contended was financially healthy, fall into bankruptcy in a matter of weeks?

Jeffrey Skilling heading back to court after a lunch break.

To some degree, Mr. Skilling's remarks on those issues mirrored previous sworn testimony he had given before Congress and the Securities and Exchange Commission. Unlike many of his former Enron colleagues, including Mr. Lay, Mr. Skilling didn't invoke his Fifth Amendment protection against self-incrimination.

Monday, Mr. Skilling reiterated that he had been thinking of resigning from Enron even before he became chief executive in February 2001. After taking the top job, those thoughts grew -- though not from any worries about Enron's health, he said.

"I was emotionally tired," Mr. Skilling testified. "I put so much of my life into [Enron]. Every day was intense. I had not spent the time I should have spent with my family."

He also conceded that he was increasingly bothered by company critics and Enron's falling stock price. "The short-sellers were all over the stock, and I was having a hard time explaining why Enron was a strong company," he said, adding that he felt he had lost credibility with Wall Street. "I was looking at the business in dark-colored glasses in some ways," Mr. Skilling said. "My head wasn't in it anymore."

While Mr. Lay tried to talk him out of resigning, no other Enron director did, Mr. Skilling said. "I don't know if I had the confidence of the board," he said. "I was a little surprised there was not more of an effort to keep me around." Those remarks seem to conflict with statements attributed to Mr. Lay during an early 2002 interview he gave to attorneys hired by Enron to investigate the company's woes. A memo of that interview cites Mr. Lay as saying that other board members did try to persuade Mr. Skilling to stay.

On the day after his Aug. 14, 2001, resignation, Mr. Skilling gave an interview to The Wall Street Journal in which he said that the falling price of Enron's stock had been a determining factor in his decision to quit. Mr. Lay felt that interview undercut the company's statements about Mr. Skilling leaving for personal reasons, according to the memo of the former chairman's 2002 interview with Enron lawyers.

Mr. Skilling punted on what could be a damaging episode for his defense. In early September 2001, Mr. Skilling attempted to sell 200,000 shares of Enron stock -- evidence, prosecutors contend, that he knew problems were afoot. He couldn't immediately sell the shares because of a paperwork issue. By the time Mr. Skilling cleared away the snag, the Sept. 11 terrorist attacks had closed securities markets. When they reopened, he sold 500,000 shares. In his SEC testimony, Mr. Skilling said that worries over the terrorist attacks were his only reason for selling Enron stock. He never mentioned his pre-9/11 effort to sell stock.

Monday, Mr. Skilling said he couldn't recall that initial stock-sale effort. While acknowledging that there was evidence of his attempted sale, he said, "I don't remember" it. He added that he still held large amounts of Enron stock when the company collapsed.

Mr. Skilling also said that he didn't have much contact with Enron officials in the weeks after he left the company. That changed, he said, on Oct. 17, 2001, with the first of a series of Wall Street Journal articles about two private partnerships that were run and partly owned by the company's then-chief financial officer, Andrew Fastow⁵. The partnerships, known as LJM1 and LJM2, did large amounts of business with Enron and were, prosecutors contend, central to the illegal manipulation of Enron's finances.

Enron executives defended the LJM⁶ arrangement, saying that Mr. Fastow's familiarity with the company allowed the partnerships to do deals more quickly and on better terms than Enron could get from other parties. The company also said that the LJM relationship had been fully disclosed in Enron's filings with the SEC.

The day before, on Oct. 16, Enron had reported about a $600 million loss for the 2001 third quarter as a result of a $1 billion charge connected to write-downs in some of its business operations. In public statements, Mr. Lay emphasized that Enron's main energy operations had sharply higher earnings, and that the company's outlook was quite bright overall. Enron's stock price rose slightly that day. Mr. Skilling testified he was happy with the earnings report.

But Enron's stock price started falling on Oct. 17. Mr. Skilling said he called Mr. Lay that day to talk about the first Journal LJM article. "The Wall Street Journal was totally out of line," Mr. Skilling testified. "I had never seen an article that was that one-sided." Mr. Skilling testified that he knew of nothing wrong in Enron's LJM dealings.

Mr. Skilling said that he called Mr. Lay again on Oct. 19 as further Journal articles appeared and Enron's stock "was dropping like a rock." He said he urged Mr. Lay to "open the kimono" and make public all kinds of information about the LJM dealings. Mr. Lay and other top Enron executives had been refusing interviews.

Mr. Lay continued to stay mum on LJM, partly citing an SEC investigation that had just begun. As Enron's stock price continued to fall, Mr. Skilling testified that he became increasingly worried about the company's future -- to the point that he again called Mr. Lay and offered to return to the company to help resolve the crisis. When that offer was turned down, "I was devastated," Mr. Skilling testified. Indeed, Mr. Skilling testified that he hired a psychiatrist in late 2001, even before he retained a lawyer.

While Mr. Skilling's rendition of events clearly seemed aimed at portraying him as a sympathetic figure, it runs some risk of raising questions about Mr. Lay's conduct and why he rebuffed his now-co-defendant's offer of help and entreaties to talk more about LJM. Possibly realizing this, Mr. Skilling, in response to a question from Mr. Petrocelli, acknowledged that "yes, it was easy for me" as an outsider to urge Enron to be more open. He later added that "I had a lot of confidence in Ken" -- though his offer to return to Enron did suggest some concerns with Mr. Lay's ability to lead the company through the crisis.

Write to John R. Emshwiller at john.emshwiller@wsj.com⁷ and Gary McWilliams at gary.mcwilliams@wsj.com⁸