Joe McCann, 24, died after being shot in the Markets area of Belfast in April, 1972.
The two veterans, known as soldiers A and C, appeared in Belfast Crown Court on Monday at the opening of their murder trial.
At the outset of proceedings, the two formally entered not guilty pleas.
Opening the case, a prosecution lawyer told the court that Mr McCann was a senior member of the Official IRA who was suspected of involvement in a number of attacks on security forces carried out by the republican group.
He said the shooting on Joy Street took place after an RUC Special Branch Officer attempted to arrest Mr McCann. Mr McCann evaded detention and ran away.
Johnny Mercer at Belfast Crown Court says IRA murder trial is unfair
The former Army officer left his ministerial role last week after a row over a lack of progress on legislation to protect British veterans who served during the Troubles from prosecution
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Who decides to prosecute?
The Legacy Investigations Branch of the Police Service of Northern Ireland reviews all murder cases linked to the Troubles.
It does not prioritise military cases, which account for approximately 30% of its workload.
Any decision by the LIB to prosecute is referred to the Director of Public Prosecutions for Northern Ireland. The MOD, and the British Government, is entirely independent of this process.
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Two former paratroopers accused of murdering IRA commander Joe McCann nearly 50 years ago have denied killing him at the start of their trial this morning.
Father-of-four McCann, 24, died after being shot in the Markets area of Belfast in 1972.
By Press Association 2021
Joe McCann murder trial
An IRA leader shot dead by paratroopers in Belfast almost 50 years ago had allegedly been responsible for murdering 15 British soldiers, the trial of two veterans has heard.
On-the-run Official IRA commander Joe McCann, 24, was killed in the shooting in the Markets area of Belfast in April, 1972.
Forty nine years later, two former paratroopers, known as soldiers A and C, have gone on trial for his murder at Belfast Crown Court.
On the opening day of the non-jury trial, a prosecution lawyer told judge Mr Justice O’Hara the veterans had not been legally justified in opening fire on Mr McCann as he ran away from them.