Two days after a court here granted him bail in a case related to the killing of Lal Masjid cleric Abdul Rashid Ghazi, Musharraf submitted two surety bonds of Rs 1 lakh each.
His lawyer Ilyas Siddiqui said, "Musharraf is a free man now."
The 70-year-old former President has been under house arrest at his sprawling farmhouse on the outskirts of Islamabad and aides said the notification declaring it a "sub-jail" would be withdrawn soon.
"The sub-jail will be denotified soon. Musharraf will hold a media briefing soon," Aasia Ishaque, spokesperson for his All Pakistan Muslim League party, told PTI.
However, staff from Rawalpindi's Adiala Jail continued to be deployed at the farmhouse in Chak Shehzad.
APML leaders and supporters gathered outside the farmhouse and distributed sweets. A large media contingent too was present.
Ahmed Raza Kasuri, a senior member of Musharraf's legal team, said his release was not part of any deal.
Besides the Lal Masjid case, Musharraf has been granted bail in three other cases registered against him over the assassination of former premier Benazir Bhutto in 2007, the killing of Baloch leader Akbar Bugti in a 2006 military operation and the imposition of emergency in 2007.
The cases were filed after he returned to Pakistan from self-exile in March to revive his political career. However, a court barred him from contesting polls for life.
Musharraf is still on the Interior Ministry's Exit Control List, which bars him from travelling out of Pakistan, but his party has claimed he will return to active politics.
"Whether his name is on the list or not, he is not going to leave the country. He will hit the streets soon and start his political campaign. He knew what he was getting into when he came here and hence there is no question of him going out," Ishaque said earlier.
Police said they had not found any evidence linking Musharraf to the killing of cleric Abdul Rashid Ghazi.
Musharraf, who returned to Pakistan to participate in the May general election, has been under arrest at his palatial farmhouse, guarded by nearly 300 security personnel, including soldiers and snipers.
After he recently submitted surety bonds to the Supreme Court and came closer to possible release, Islamabad Police arrested him last month in the Lal Masjid case.
Musharraf, who was then army chief and President, had ordered the crackdown on extremists holed up in the Lal Masjid in 2007. About 100 people, most of them extremists, were killed in the operation.
On the orders of the Islamabad High Court, a case was registered against Musharraf on September 2, charging him with the murder of the cleric and his mother. The case was filed after the cleric's son filed a complaint with police and approached courts.
The next hearing in the case is scheduled for November 11.
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