Fedor Zan told the Old Bailey that Mr Sawoniuk had first ordered the women to strip to their underwear and stand in front of pre-dug graves.
"I hid myself in the bushes and observed what happened. He had a sub- machine gun," said Mr Zan. "They turned to face the pit as ordered."
Mr Zan then imitated the action of someone shooting with a machine gun. "Once that happened I looked round and they had gone. The women fell into the hole."
Mr Sawoniuk, 78, is alleged to have murdered up to 20 Jews while serving as a policeman in Domachevo in Nazi-occupied Belarus between 1941 and 1944. The former British Rail ticket collector who lives in south London is alleged to have organised "search and kill" operations to track down Jews who had escaped a Nazi massacre in the town in September 1942 in which 2,900 Jews were murdered in one day. Mr Sawoniuk denies all the charges.
Mr Zan, 76, had told the court that he had known Mr Sawoniuk while they were both schoolboys in Domachevo. He said he was able to recognise Mr Sawoniuk as the gunman because he was well-known in the community. "He was famous by that time," he said.
Mr Zan, who acted as a guide for the jury when they travelled to Belarus to visit the scene of the alleged killings, said he had been alerted to the women's plight by the sound of crying as he was walking home from work.
"When I heard the cries, I walked to see where they were coming from," he said.
"They had taken their clothes off and were asked to put them in a pile. They were then asked to turn round and face the pit.
"He mowed them down with a machine gun. There were not less than 15 Jewish women."
On a previous occasion, he said he had witnessed his aunt and her family being led from the local police station to their execution. The court heard earlier that they were suspected of associating with anti-Nazi partisans.
"I was taking food to the police station for them. I saw them tied up being led through the Jewish ghetto to the sandhills," said Mr Zan.
"They were tied in a row - one after another. My uncle was in front, aunt in the middle and my two cousins were at the back. Sawoniuk and another policeman were escorting them. Sawoniuk was carrying a sub-machine gun. The second policeman was carrying a carbine. Once they had passed through the gates of the ghetto, I did not see them again."
The trial jury was yesterday reduced to 11 members after a woman juror fell ill and was taken to hospital at the weekend.
After court staff inquired about her and found she would have to remain in hospital for another week, Mr Justice Potts decided to discharge her.
He warned the remaining members of the jury not to contact the woman in hospital although it was "highly understandable" that they might want to after sitting for nearly five weeks together.
The trial continues.