Mrs Brooks told jurors that in 2006, when she was then editor of The Sun, she was on holiday in Italy when a colleague told her about the arrests. She immediately phoned Andy Coulson, editor of the News Of the World, to find out what happened.
Initially, Mrs Brooks heard of a raid on the News of the World offices by counter terrorism officers and the arrest of royal editor Clive Goodman for phone hacking - an offence he later admitted, she said.
It was only later she heard that a private investigator - Glenn Mulcaire - had also been picked up by police for intercepting voicemails.
She said: "I remember a huge shock and confusion."
On speaking to co-defendant Mr Coulson about Goodman, she said: "He sounded very shocked and concerned. He told me what he (Goodman) had been arrested for. It stands to reason I said, 'Is it true?'. I'm sure at the beginning no-one knew whether it was true or not.
"It was the enormity of the raid, there was a royal editor arrested accused of interception of voicemails ..."
Mrs Brooks, 45, and Mr Coulson, 46, deny conspiring to hack phones and other charges against them. Mr Goodman, 55, denies conspiring to commit misconduct in public office.
Mrs Brooks also denied telling the wife of golfer Colin Montgomerie, Eimear,that it was easy it was to hack phones if the factory setting was not changed.
She told jurors it "was not the kind of thing I would say".
The trial continues.