US student Knox and her former lover Italian Raffaele Sollecito spent four years behind bars for the murder of Meredith Kercher, who was found half-naked in a pool of blood in the house she shared with Knox in 2007, her body riddled with stab wounds.
Kercher's throat had been slit and she suffered a "slow, agonizing" death, according to the coroner's report.
An appeals court overturned their convictions in 2011 and Knox returned to Seattle, but Italy's Supreme Court in March ordered a retrial for them both following an appeal by prosecutors against what they slammed a "superficial ruling."
Knox, 26, has decided not to return for the retrial, saying her stint in prison aged her by 40 years and she suffers from panic attacks and depression.
"I was depicted as a young, unscrupulous liar. A sex fiend, a murderess. I'm not coming back," she told Florence's local Corriere Fiorentino daily on the eve of the hearing.
If Knox is convicted again and loses another Supreme Court appeal, experts say there is a remote chance that she could be extradited and imprisoned.
"It took us as a family nearly five years to even begin to feel ready to lay Mez to rest and it is still extremely painful now, however she now has a place near to us that we and her friends can visit to take flowers and spend time," Meredith's elder sister, Stephanie, said in the statement seen by The Local.
Meanwhile, 29-year-old Sollecito has been living in the Dominican Republic but his family has said he will attend court later on in the trial, which could last months.
Retrial judge Alessandro Nencini will have to decide whether to order DNA evidence to be examined again from scratch and re-hear witness testimony.
"We are ready to fight, to answer every challenge point by point," Knox's lawyer Luciano Ghirga said following the Supreme Court's decision.
Italy's highest court said a retrial was necessary because of "numerous examples of shortcomings, contradictions and incoherencies" in the appeal ruling.
It accused the judges of glazing over clues and insisted the prosecution's claim from the original trial — that the grizzly murder was the result of "an erotic game that spun out of control" — was a valid hypothesis.
It strongly questioned the decision not to test a third trace of DNA found on the alleged murder weapon — a kitchen knife found in Sollecito's house — despite experts saying the trace was too low to produce conclusive results.
It accused the judges of not considering the prosecution's claim that Sollecito's involvement was proved by the fact that only one in three billion people were compatible with the DNA traces found on Kercher's bra strap.
The defence insists the DNA samples were not admissible because the original probe into the murder was flawed — with police caught using dirty gloves to bag evidence and failing to store it properly, opening the way to possible DNA contamination.
The Supreme Court said Knox's original confession to police which she later retracted — in which she said she heard Meredith's screams from another room in the house and covered her ears — was undervalued.
The US student insists the claim was made under duress.
The report also wondered why her initial bid to finger an innocent Congolese barman for the crime held little weight in the appeal verdict.
Ivory Coast-born drifter Rudy Guede, who like the other two has always denied the murder, is the only person still in prison for the crime.
The original case shone an unflattering light shone on Italy's criminal justice system.
Key questions dismissed on appeal are now back on the table — with the Supreme Court stressing that Guede could not have acted alone because of the apparent use of two different knives in the attack.