Joanne Barbara Smith was due to appear in Auckland District Court next week but that hearing will not be needed after she pleaded not guilty through her lawyer.
The 33-year-old from Palmerston North elected trial by jury and police agreed to her bail.
Her bail conditions restrict her from contacting her brother or any other police witnesses and she must live in her Highbury home.
Phillip Smith allegedly fled to South America while on temporary release from Spring Hill Corrections Facility in South Auckland on November 6. He was serving a life term at the time for the 1995 stabbing murder of the father of a boy he had sexually abused.
At the time, Smith - who had tracked the family down to a Wellington house where they had moved to escape him - was on bail for the sexual offending and charges of blackmail against a man who later killed himself.
He was caught in Rio de Janeiro on November 13 - a week after he left New Zealand last year.
Basil Smith, who raised his stepson from the age of 3, said he did not blame Ms Smith for her brother's escape.
"We're quite pissed off with what he's done. I think he's conned her into it," he said.
Ms Smith will appear in Auckland District Court alongside her brother next month.
She faces a maximum of seven years imprisonment if found guilty of the charge.
