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Cregan, 29, wearing a false left eye made of black onyx, had evaded a nationwide manhunt when he set the trap, Preston Crown Court heard.
Cregan is accused of the murders of David Short, 46, and his son, Mark, 23, in the months before allegedly killing Pcs Nicola Hughes, 23, and Fiona Bone, 32, in a gun and grenade attack on September 18 last year.
Pc Hughes’s mother Susan and father Bryn sat in front of the parents of her murdered colleague, Paul and June Bone and Miss Bone’s partner Clare Curran, in the public gallery, raised above the dock and across the packed courtroom from where Cregan sat in the dock.
Stern-faced, they listened intently as Nicholas Clarke QC began to outline the case for the prosecution.
He told the jury that after killing the father and son, Cregan was still on the loose despite the hunt to track him down.
“On the 18th September 2012 he called in a spurious burglary at Abbey Gardens in Hattersley, luring two unarmed police officers to investigate,” Mr Clarke said.
“He lay in wait with a Glock firearm with an extended magazine that was fully loaded.
“Pc Fiona Bone and Pc Nicola Hughes attended. As soon as they arrived Cregan shot the officers repeatedly, until his magazine was empty.
“As he left the scene he again threw a grenade towards the victims.”
Mr Clarke began by telling the jury that Mark Short was shot at the Cotton Tree pub in Droylsden, Manchester, on May 25 last year.
He said: “At the time that his son Mark was shot, David Short, the head of the Short family, was using the toilet.
“Otherwise he himself would have been a target. His son died in his arms.”
After Mr Short was buried at Droylsden cemetery, his father went on a daily basis to his grave to grieve, the jury were told.
But on the morning of August 10 he was at home - when his killers came calling.
“He was chased through the house and shot many times,” Mr Clarke continued.
“He tried to run around the side of the house to escape. His injuries were already unsurvivable and then a grenade was thrown onto him.
“Its explosion had devastating consequences for his torso.
“It is the first time in this country that a military grenade has been deployed in this way.”
Mr Clarke told the jury about the background to the murder of Mark Short at the Cotton Tree pub.
He said: “The Short family had been involved for a number of years in a long-standing feud with members of the another local family, the Atkinsons.
“The families had reached a state of uneasy peace following their lengthy dispute.”
But the court heard that on May 13, there was a row in the Gardeners Arms pub which carried on into the Cotton Tree.
The row was between Theresa Atkinson - dubbed “the matriarch of the Atkinson family” - and Raymond Young, a member of the Short family.
Mr Clarke said: “Theresa Atkinson was drunk and lashed out with a bottle, striking Young.
“It led to Raymond Young backhanding Theresa Atkinson.”
The jury was told she responded by shouting: “I’m going to get you done by my sons, I’m gonna get you done by my sons.”
She also said: “You just wait here, you’re dead.”
Mr Clarke told the court that after this incident Theresa Atkinson repeatedly tried to contact her son Leon’s mobile phone and they spoke the next morning.
Mr Clarke said that straight after that call Leon Atkinson contacted his two brothers and sent a text message to his “old friend” Dale Cregan, who then began making contact with the other defendants alleged to be involved with the Cotton Tree murder.
Mr Clarke said: “Livsey, James and Hadfield were being recruited to the plan, hatched by Atkinson and Cregan for revenge.”
He added: “They decided to exact revenge for the lack of respect shown to Theresa Atkinson and so the shootings at the Cotton Tree were a direct reprisal.”
The jury heard on the night of May 25 the Short family and friends gathered at the Cotton Tree pub for drinks.
Mr Clarke said police analysis showed the defendants accused of the murder of Mark Short were in “close contact” in the hours before the shooting.
The prosecution claims Atkinson, 35, from Ashton-under-Lyne, travelled to a caravan park in Prestatyn, North Wales, to give himself an “incontrovertible alibi”.
Cregan, Luke Livesey, 27, from Hattersley, and Damian Gorman, 37, from Glossop, were to carry out the attack.
Ryan Hadfield, 28, from Droylsden, and Matthew James, 33, from Clayton, were to act as “spotters” to ensure the targets - the Short family - were in the pub.
James was outside having a cigarette when more of the Short party arrived - then made a hasty exit, jumping in someone else’s taxi that had been called to the pub.
Phone records showed James then called Cregan who was with Livesey, a call that “initiated the chain of events that followed”, Mr Clarke said.
Cregan then called Atkinson in Wales who was “managing and directing” the operation to discuss their plan to “exact revenge” on the Shorts.
The court heard that police investigations tracked Cregan and his co-accused through their mobile phones.
CCTV was then played to the jury which showed a blue Ford Focus car pulling up outside the Cotton Tree at 11.49pm.
The prosecution say that Cregan, Livesey and Gorman were the men in the car.
The Ford can be seen putting on its hazard lights and pulling up at the side of the pub before a figure runs out of the car and into the building.
Mr Clarke said Raymond Young was in the bar and saw the door open. He saw the gunman enter wearing a black balaclava.
“In his outstretched hand was a gun. The gun was fired. Mark Short was nearest to the door when the gunman came in,” Mr Clarke said.
Mark Short fell to the ground as the firing continued, focused on the people stood around a pool table.
Three more men, John Collins, Michael Belcher and Ryan Pridding, were also hit and fell to the floor.
Mr Clarke said: “After firing seven shots in quick succession, the gunman left through the door that he had entered and jumped back into the front passenger seat of the waiting Ford Focus.”