Blagojevich is being retried in federal court in Chicago on corruption charges, including that he tried to sell the Senate seat that became vacant when Barack Obama was elected president.
In a secretly taped Nov. 12, 2008, phone conversation, Blagojevich and his chief of staff, John Harris, discussed alternative candidates for the Senate seat after learning Valerie Jarrett, a friend of the newly elected president, was no longer interested.
Blagojevich indicated he would reluctantly consider Jackson.
"I mean Jesse Jr., it's a repugnant thought to me. I can't believe anything he says ...," Blagojevich said.
"I understand," Harris answered.
A Jackson supporter offered to raise a minimum of $1.5 million for Blagojevich if Jackson got the appointment, prosecutors allege.
The court also heard the portion of a taped conversation in which Blagojevich reacted negatively to word that the Obama administration would only be appreciative if the governor named someone the president-elect favored.
"They're not willing to give me anything except appreciation. [Expletive] them," Blagojevich said. "You know what I mean?"
Harris told the court on the first day of testimony he considered Blagojevich's talk of appointing Illinois Attorney General Lisa Madigan to the Senate a ruse, intended to squeeze Obama into cutting a deal resulting in a post for Blagojevich in the new administration.
Harris touched on three of the five major "shakedown" schemes prosecutors described to jurors in their opening statements, the Chicago Sun-Times reported.
In a taped phone call they played Tuesday Blagojevich is heard asking Harris, "I'm the governor of a $58 billion corporation. Why can't I be ambassador to India?"
In that November 2008 call, the then-governor lists the top jobs he hoped to land by appointing Jarrett, Obama's chosen candidate, to the U.S. Senate.