SAN JOSE, Calif.—Elizabeth Holmes took jurors into the Theranos Inc. lab Monday during testimony at her criminal-fraud trial, describing ways the startup sought to reduce errors in lab testing and miniaturize traditionally bulky blood-testing machines.

“We thought this was a really big idea,” Ms. Holmes said of Theranos’s attempts to remove human error from steps involved in the testing process by automating it.

Ms....

SAN JOSE, Calif.— Elizabeth Holmes took jurors into the Theranos Inc. lab Monday during testimony at her criminal-fraud trial, describing ways the startup sought to reduce errors in lab testing and miniaturize traditionally bulky blood-testing machines.

“We thought this was a really big idea,” Ms. Holmes said of Theranos’s attempts to remove human error from steps involved in the testing process by automating it.

Ms. Holmes’s narrative is an effort to strike back at prosecutors’ allegations that Ms. Holmes knew Theranos’s blood-testing technology was inaccurate and unreliable when she solicited hundreds of millions of dollars from investors and the startup rolled out its testing to patients. She has appeared confident and relaxed on the witness stand.

Jurors will be asked to weigh her side of the story against 29 witnesses called by the government, a mix of former employees, investors, business partners, patients and others who spoke about the promise and ultimately the failure of Theranos’s finger-prick blood-testing technology.

Ms. Holmes’s testimony offers her most direct opportunity over the monthslong trial to sway jurors who will be voting on whether she is guilty of fraud. Ms. Holmes is accused in an 11-count indictment of intentionally deceiving patients and investors about the capabilities of her blood-testing startup, with each count carrying a maximum sentence of 20 years. Theranos dissolved in 2018, months after the criminal charges were brought.

Theranos founder Elizabeth Holmes testifying, in this courtroom sketch on Monday.

Photo: VICKI BEHRINGER/REUTERS

The San Jose courtroom and an overflow room with a video feed filled up quickly Monday morning with journalists, spectators and friends of Ms. Holmes angling for one of the limited seats. An unexplained delay meant Ms. Holmes didn’t take the stand until more than an hour and a half after the scheduled start time.

Defense lawyer Kevin Downey led Ms. Holmes chronologically through Theranos’s early years, asking her to explain problems the company discovered in its first prototype and how the team worked to resolve them.

Mr. Downey at times tried to show jurors that Ms. Holmes received positive reports from lab scientists about the development of the technology, which could bolster her defense that she believed Theranos was on track to creating its proprietary blood-testing technology, even if it didn’t ultimately do all it set out to do.

“I took away that we were hitting the design goals for this system and the system was performing in a way that was excellent in clinical sites,” she said in response to reviewing a 2008 presentation given to her by a Theranos scientist.

In the trial of Elizabeth Holmes, prosecutors have shown texts, emails and audio clips portraying her in her own words. WSJ’s Shelby Holliday asked Sara Randazzo about key pieces of evidence and what to expect. Photo: Nick Otto/AFP via Getty Images The Wall Street Journal Interactive Edition

Reflecting back on another presentation given by the same Theranos scientist in February 2010, she testified, “I understood that the 4 series could do any blood test,” referring to the iteration of the company’s proprietary device at that time.

Ms. Holmes testified about Theranos’s early attempts to work with the Defense Department, explaining that they were jointly working on several studies, including seeing whether there were markers in the blood that could predict post-traumatic stress disorder. Another involved infection in trauma patients and how better to predict whether people were going to get sick. No military partnership ever succeeded, she said.

Prosecutors accuse Ms. Holmes of inaccurately touting a relationship with the Defense Department when pitching investors. Several investors who testified said the startup’s relationship with the military was one of several compelling reasons that persuaded them to invest.

Ms. Holmes also described Theranos’s early desire to work with pharmaceutical companies, as well as contracts they had with companies including Merck & Co., Bristol-Myers Squibb Co. and AstraZeneca PLC.

Elizabeth Holmes walking into court Monday, where the courtroom and an overflow room filled up quickly.

Photo: Sara Randazzo/The Wall Street Journal

After discussing emails showing positive feedback from the companies, Ms. Holmes testified that Theranos’s technology was never used in clinical trials with any of them.

Jurors heard more Monday about two pharmaceutical companies whose names have repeatedly come up at trial: Pfizer Inc. and Schering-Plough Corp. Prosecutors have alleged that Theranos doctored reports with both companies’ names purporting to validate Theranos’s technology.

Scientists at the pharmaceutical firms said in earlier testimony that they had dismissed the idea of working with Theranos and were unimpressed with the startup’s technology, and hadn’t seen the doctored reports until prosecutors showed them.

Mr. Downey didn’t address the allegedly forged documents head-on, but presented emails in court that showed Theranos continued to have encouraging exchanges with both companies, including discussions about potential future partnerships, despite the earlier skepticism.

By 2010, Ms. Holmes testified, Theranos’s focus had shifted to working with retail partners. Theranos ultimately offered its blood-testing services in Walgreens Boots Alliance Inc. pharmacies and spoke for years with the Safeway Inc. grocery store chain about rolling out testing centers there, though the deal was never executed.

Ms. Holmes first took the stand Friday, hours after the government called its last witness. Her testimony followed two other witnesses presented by the defense, including a former board member who joined after Theranos’s problems came to light. The defense could call other witnesses after Ms. Holmes’s testimony concludes, though criminal-defense lawyers say defendants typically take the stand last.

—Heather Somerville contributed to this article.

Write to Sara Randazzo at sara.randazzo@wsj.com