Domenico Rancadore, 64, nicknamed "The Professor", was part of a gang that "spread terror in Sicily", Westminster Magistrates' Court in London was told.
Prosecutor Benjamin Seifert said Rancadore was one of the heads of the Cosa Nostra, "made up of thousands of members spreading terror in Sicily by imposing its rules and controlling the area and systematically murdering anybody who did not comply with the will of the members of the organisation."
Rancadore was denied bail on the grounds that he has evaded capture since coming to Britain 20 years ago by living under a false name.
He was arrested on Wednesday at his home in Uxbridge, west London, where he tried to escape through the garden but was stopped by a policeman.
There were concerns on Thursday about the validity of the warrant for the former teacher issued by Italy, but a new warrant was issued on Friday and Rancadore was re-arrested in the cells of the court.
Judge Quentin Purdy told him that he would appear again in court on August 22nd, but that a full extradition hearing would not take place until November.
Tanned and grey-haired, Rancadore wore a white shirt with pale blue stripes, grey trousers, and glasses. He blew a kiss to his wife and daughter in the public gallery when he arrived in the courtroom, and as he left the glass-fronted dock.
He has been living under the name of Marc Skinner in a modest suburban street where one neighbour, Joan Hills, 76, described him as "one of the best neighbours you could ever have".