The ER star testified on Tuesday (13Jul10) in the federal trial of Allison Coss and Scott Sippola, who were arrested in December (09) after they allegedly threatened to release snaps of the actor with cocaine and strippers unless he handed over $680,000 (£453,000).
Coss claims she met the actor when she was 17 before embarking on a romantic affair - allegations his lawyer denies.
Stamos maintains he met Coss in 2004 at a party in Orlando, Florida, while recovering after separating from his wife, Rebecca Romijn.
Taking to the stand, Stamos explained. "I was very heartbroken at the time."
He told prosecutors about his subsequent email exchanges with Coss, describing them as "flirty" but "friendly". He added: "It was all very sweet. I considered her a friend."
The actor was then made to read from a book of emails, including messages from a "J Taylor" who told the star she was pregnant with his child.
Stamos read: "If this gets out, I am screwed. But most of all you are screwed 10 times more than me."
The star also read aloud emails received in November (09) from a man known as "Brian L", who tells the star he has been offered $780,000 (£520,000) from a tabloid for photos of him allegedly taking drugs and drinking.
Stamos told the court he contacted authorities at this time because he "felt threatened, violated", adding: "I felt this was illegal."
He testified that FBI officials then took over his correspondence, according to the Associated Press.
Two agents testified on Monday (12Jul10) about staging a sting which ended in Coss and Sippola's arrest.