The 48-year-old man, named in media reports as lorry driver Detlef S., stands accused of 350 counts of sexual abuse and grievous sexual assault of minors.
Between 1987 and 2010, the man is suspected of abusing the trio and even farming the two females out to other men for sexual abuse in exchange for money.
One of the man's neighbours told the Rhein-Zeitung local daily: "We often wondered about the several children in his house. Especially because they looked so much like him."
The stepdaughter, now 27, has seven children from her stepfather aged from 11 years to 15 months, her lawyer Katharina Hellwig said. An eighth child died.
Authorities were alerted after the man's real daughter, 18, wrote a goodbye letter to the mother which was however intercepted by her half-sister, who gave it to social services, Hellwig said.
The man was arrested on August 10, 2010 and has been in custody ever since. The mother, who is in her 50s, is expected to appear as a witness in the trial and prosecutors are not charging her with any offence, Hellwig added.
"It looks as if she repressed what went on," the lawyer said. The trial is set to begin at the regional court in Koblenz, western Germany, on Tuesday.
"The crimes are so horrific that even experienced lawyers are shocked," the Rhein Zeitung said.
The case bears some similarities to that of Josef Fritzl in neighbouring Austria, who held his daughter Elisabeth as a sex slave in a cramped windowless dungeon for 24 years.
Fritzl raped her thousands of times, fathering seven children with her and letting one of the newborn babies die. He was sentenced to life in prison in March 2009.
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