Headley appeared before US magistrate Judge Arlander Keys in US district Court for the Northern District of Illinois here.
He entered a not guilty plea to the 12 counts filed against him including charges he conspired in plotting the terror attacks in Mumbai and a Danish newspaper.
"That is correct", Headley said when the judge asked him if he is entering a not guilty plea.
US Judge Keys set a status hearing for Feb 23 before US District Judge Harry Leinenweber.
Speaking to reporters, Headley's lawyer John Theis said, "Case is progressing. It is going to be a significant period of time while we review the evidence."
"We will continue to review the evidence with Headley and would report to Leinenweber about how things are moving along and whether we are making progress as to an ultimate disposition of the case," Theis added.