The Manchester Arena bomber encouraged a teenager to study chemistry to learn how to build a bomb, a court has heard.
Hashem Abedi is on trial accused of helping his brother Salman plot the attack that killed 22 people in 2017.
In a tape played to the Old Bailey, the witness said Salman had "talked about martyring" before making the comment.
The witness said he laughed it off, adding: "I would not associate their family to be that type".
During the police interview, the then 16-year-old described the conversation with Salman in a car driven by Hashem Abedi.
The boy, who cannot be named, stated that Salman had asked what he was doing in college and he had replied "mainly chemistry".
The student said: "He [Salman] has told me stuff. We was in the car... 'do chemistry so you can build a bomb'.
"Before that he talked about martyring. He talked about Jihad. 'Jihad is beautiful'.
The court heard the witness also told police Salman, who died after detonating the device at the Ariana Grande concert, talked "about how being a martyr was something big".
When asked how he reacted to the bomb comment, he replied: "I would not associate their family to be that type.
"I laughed it off. He [Salman] might have laughed too. He might have said "heh".
"Even if he said to me "I'm building a bomb" I would not have believed him. That's how insane it is, you know what I mean?"
The witness told jurors by video link how the Abedi brothers would remind him to go to prayers by text message.
Salman also visited his house and talked about religion, the teenager said, adding: "He would speak about how this life is temporary, make sure you don't get lost."
The witness said he respected Salman even though he appeared "fatigued" and to "lack energy".
Hashem was like a "handyman" who liked to talk about fixing cars, jurors heard.
He denies 22 counts of murder, one of attempted murder and one of conspiring to cause an explosion.
The trial continues.