John Patrick Casey has pleaded not guilty to three counts of sexual assault against a person under the age of 16.
The charges relate to an alleged incident in 1982 at Father Casey's home at Mallanganee in northern New South Wales.
Father Casey was the parish priest at Mallanganee between 1981 and 1988.
In her opening address, the crown prosecutor told a jury of seven women and five men the case against the 76-year-old would rely on photos and church records, but mostly on evidence from the complainant and a friend of the complainant who was also a teenager at the time.
She told the court, Father Casey took the boys out for day trips, weekends away and for sleepovers at his home, often letting them drink alcohol and smoke cigarettes.
It is alleged on one of these occasions Father Casey offered the complainant grilled lamb chops for dinner, gave him alcohol and lit a fire before starting to rub his shoulders.
It is alleged the priest then performed an indecent massage on the complainant, then 14, using his finger or thumb to penetrate the boy's anus.
The court heard the complainant was scared to stay overnight at the priest's house and never went back.
He never spoke to his friend of what allegedly happened to him, and did not go to the police about it until he was 52 years old.
Defence barrister Jason Watts told the jury his client denied any indecent act.
Mr Watts told the jury he would argue the complainant and his friend were unreliable witnesses.
He said the jury would need to consider the "reliability of what someone says now about what happened to them as adolescent".
The court was closed this afternoon as the complainant gave his evidence, with Father Casey seated in the dock in the same courtroom.
The case is due to run until Friday.