Mohammad Emad Uddin Ahmadzai, 31, had spent months in the community despite federal police accessing data on a phone allegedly belonging to him which contained violent extremism material.
Videos on the device allegedly showed a hostage being shot in the head at close range, beheadings, throat cuttings, mass casualties, dead children and IS flags and logos.
Ahmadzai was denied bail in Melbourne Magistrates Court on Thursday after being charged with possessing violent extremist material and failing to provide access to his electronic devices on request.
Magistrate Samantha Seoud said the alleged offending was serious, the prosecution's case was "not weak" and delay was not an issue at this point in time.
"I am not satisfied the applicant has established the exceptional circumstances that justify the granting of bail," she said.
Ahmadzai appeared in court via videolink and sat with one leg propped up on his chair while stroking his beard throughout the hearing.
Federal police on May 7 raided a home at Roxburgh Park in Melbourne's north that he shared with his brother and seized two phones, a tablet and a broomstick with a screwdriver head, Sergeant James Allison previously told the court.
When officers asked for the passcode to the phone, Ahmadzai allegedly refused.
Authorities gained access to the phone five days later but only analysed the contents on August 7.
Sgt Allison described the alleged material as "very offensive, very extreme" and "quite horrific", but he was allowed to remain free and travel to Afghanistan to look after his ill father.
The federal police sergeant said detectives had been prioritising a related investigation involving four men, including Ahmadzai's brother, who have been charged with possessing violent extremist material offences.
After the accused returned to Melbourne from Afghanistan on August 7, border officials allegedly found a video of a flag of terror organisation JNIM on another phone.
On the same day, federal police discovered the alleged extremist videos on his seized phone.
Border agents also seized the second phone and a bubble-wrapped desktop computer in his luggage, which federal police were yet to analyse.
Police resourcing and risk assessments meant he was again allowed to walk free, only to be arrested at Melbourne Airport on Saturday as he prepared to depart for Afghanistan.
Opposing bail, prosecutor Bridget Atkinson said Ahmadzai's alleged offending was serious given the "not isolated" alleged link to the violent ideology.
Defence lawyer Siobhan Stary said the offence, which carries a five-year maximum, was less serious than other terror-related charges.
She said investigators had yet to determine if he had engaged with the material.
Ahmadzai will return before the court on January 15.
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