In opening statements in federal court, Ventura attorney David Olsen said the punch never happened and that Ventura never made disparaging comments about servicemen, as Kyle claimed.
"Jesse Ventura will testify there was no incident, there was no altercation, and that Kyle made the whole story up," Olsen said.
Kyle estate attorney John Borger countered that the jury would get the real story from Kyle via testimony videotaped before his death.
"You will hear Chris Kyle testify he was absolutely sure that what he wrote about Jesse Ventura's behavior was true," Borger said. Both sides said they would produce witnesses to back their version of events.
A four-woman, six-man jury was seated quickly to hear Ventura's case, which he pursued even after Kyle was killed last year at a Texas gun range, saying it was important to clear his name.
Ventura, a former Navy SEAL and wrestler who was Minnesota governor from 1999-2003, alleges Kyle defamed him in his best-selling book.
In it, Kyle - also a former SEAL and regarded as the deadliest sniper in U.S. military history - describes a 2006 bar fight in California in which he said he punched a man, later identified as Ventura, knocking him to the ground. Kyle claimed that Ventura was speaking loudly against President George W. Bush, the Iraq War and Navy SEAL tactics. Kyle claimed Ventura said the SEALS "deserve to lose a few."
Ventura, who has hosted several cable TV shows since his single term as Minnesota's governor ended in 2002, has said his job offers dried up after the book was published and he was worried about being seen as a traitor to the military.
Kyle's widow, Taya Kyle, is now the defendant in Ventura's case. Ventura and Taya Kyle are both expected to testify.
Ventura, who often had a contentious relationship with the Minnesota media, declined to speak to reporters as court broke for lunch. He watched Tuesday's proceedings with a serious look on his face most of the time, only occasionally cracking a smile while speaking with his attorneys.
Legal experts have said Ventura has to prove that Kyle made up the story and profited from it, and that Ventura's reputation was hurt as a result.
Ventura said earlier this year that his lawsuit is "about clearing my name," but significant money is at stake. Kyle's book has made more than $3 million in royalties and the judge in the case has ruled that profits from an upcoming movie could be subject to damages, too.