The indictment of the army chief who seized power in a 1999 coup was almost an unthinkable event in a nuclear-armed country ruled by the military for half of its 66-year history.
Ms Bhutto, a former prime minister, died in a suicide gun and bomb attack in December 2007 after a campaign rally in the city of Rawalpindi, not far from the heavily guarded court room where the charges were read out yesterday.
Three charges of murder, conspiracy to murder and facilitation of murder were put to Mr Musharraf.
The case has shattered an unwritten rule that the top military brass are untouchable as Pakistan tries to shake off the legacy of decades of military rule under the new government of Prime Minister Nawaz Sharif.
It was Mr Musharraf who toppled Mr Sharif's government in the 1999 coup, and memories of that time are still fresh among members of the current administration. Mr Sharif was sentenced to life in jail by Mr Musharraf but eventually went into exile.
Security was tight in Rawalpindi, the seat of Pakistan's military headquarters, after a previous hearing was delayed due to threats to Mr Musharraf's life. The Pakistani Taliban have threatened to kill him.
Mr Musharraf, 70, made no comment as he arrived but denied all the charges against him once inside the court room, a lawyer from his defence team said.
Observers believe it is still possible Mr Musharraf would be allowed to go back into exile.
Ms Bhutto was killed weeks after she returned to Pakistan from years in self-imposed exile.