Oscar Pistorius claims he shot and killed his girlfriend because he thought she was a robber.
His lawyer read out a statement in court which gave his version of the events that led to Ms Steenkamp's death. The 26-year-old denied murder and said the couple were "deeply in love".
In the statement, the defendant said he felt vulnerable because he was not wearing his prosthetic legs. He claimed he fired his gun into the bathroom, but then realised Ms Steenkamp was not in his bed.
"It filled me with horror and fear," Pistorius said.
Upon realising his mistake, he put on his legs, walked towards the bathroom and broke down the locked door with a cricket bat.
He said he ran downstairs carrying his 29-year-old girlfriend, but "she died in my arms".
Pistorius added: "I fail to understand how I could be charged with murder, let alone premeditated murder, as I did not plan to murder my girlfriend, Reeva Steenkamp."
The couple went to sleep shortly after 10pm, Pistorius said, but in the middle of the night he woke up and thought an intruder had climbed in through his bathroom window.
He said he grabbed a 9mm pistol - which he kept under his bed after receiving death threats - and made his way in the darkness towards the bathroom door.
"As I didn't have my prosthetic legs on I was vulnerable," he said. "I fired a shot at the toilet door and shouted to Reeva to call the police."
The defendant described how he was "absolutely mortified at the death of my beloved Reeva".
Pistorius began shaking and crying as his statement was read out, as the bail hearing took place as Steenkamp's funeral was held in her home town of Port Elizabeth.
Magistrate Desmond Nair ruled that the case was a schedule six offence - meaning premeditated murder – and prosecutor Gerrie Nel told the court that at 3am Pistorius got up from his bed, walked to the bathroom door and fired four shots through the door, hitting her three times.
"She couldn't go anywhere. You can run nowhere," Mr Nel said.
He told the court Pistorius later told a friend he thought she was a burglar.
Mr Nel added: "It was all part of the pre-planning. Why would a burglar lock himself inside the bathroom?"
Pistorius' lawyer, Barry Roux, said Steenkamp was not murdered, and there were a number of cases where men shot members of their own family through doors after mistaking them for burglars.
He also suggested that Pistorius broke down the bathroom door after the shooting to help Steenkamp.
"We submit it is not even murder," Mr Roux said. "There is no concession this is a murder."
The court hearing was adjourned until tomorrow.