Said Mansour, who was arrested on Thursday, is accused of making and distributing CDs and videos that call for violence against the Western world.
The Copenhagen City Court on Friday ordered Mansour held in jail for four weeks as prosecutors prepare charges of instigating terrorism.
The court justified the decision by saying Mansour was at risk of continuing to spread the material.
Mansour's lawyer, Claus Bergsoe, said he would appeal against the ruling and claimed his client's freedom of speech had been violated.
At the detention hearing, prosecutors played videos showing Chechen Muslims decapitating and shooting Russian soldiers.
Other videos showed the beheadings of American hostage Nicholas Berg in Iraq and Wall Street Journal reporter Daniel Pearl in Pakistan.
"All this has been on Aljazeera, on BBC, on al-Arabiya, on CNN"
The CD-ROMs containing the video clips all carried the logo of Mansour's publishing house, Al Nur Islamic Information, which also has been distributing the radical magazine Al Ansar.
Prosecutors said that while it was legal to possess such videos and discs, it was a crime to distribute them.
Mansour denied the charges, and called the videos "documentaries."
"All this has been on Aljazeera, on BBC, on al-Arabiya, on CNN," Mansour told the court, referring to major TV networks.
If formally charged and convicted, Mansour could face up to six years in prison.
During a yearlong investigation that led to his arrest, police seized dozens of films and CD-ROMs that Mansour allegedly was selling at a flea market in the Danish capital.
Some of the material made by Mansour was seized in Germany and Italy, and at his home in suburban Copenhagen, prosecutors said.
Path to detention
Denmark's intelligence service has said he was under surveillance, and that he had contacts with al-Qaida's No. 2 leader, Ayman al-Zawahri.
The defendant is said to have
contacts with Ayman al-Zawahiri
In a March 2003 interview with a Danish newspaper, Mansour called the 11 September attacks in the United States "a benign kind of terrorism (as) opposed to the malign kind that the United States for so long had carried out against the Muslim world."
Mansour has openly defended another Moroccan man, Omar Maarouf, who was sentenced to death in 2003 by a Moroccan court for having ties to a group suspected of five Casablanca bombings in May 2003 that killed more than 40 people.
Mansour and the police have said the blind Sheikh Omar Abdel-Rahman, who was convicted in connection with the 1993 bombing of the World Trade Centre in New York, stayed at his home in December 1990 and May 1991.
Mansour was sentenced to three months in jail in 2003 for possessing stolen goods and an illegal weapon.