The Rawalpindi bench of the Lahore High Court rejected an application by Musharraf's lawyer Salman Safdar for the extension of his interim bail.
Safdar filed an objection against the court’s decision but this too was rejected by the bench.
69-year-old former president had been granted interim bail for a week on April 17. Legal experts said he is likely to face arrest in the assassination case too following the Lahore High Court's decision.
Musharraf has been accused of failing to provide adequate security to Bhutto when she returned to Pakistan from self-exile. She was assassinated by a suicide bomber shortly after addressing an election rally in Rawalpindi in December 2007.
An anti-terrorism court on Tuesday ordered the Federal Investigation Agency to include Musharraf in the probe into the assassination.
The former military ruler was arrested last week after the Islamabad High Court revoked his bail in a case related to the detention of over 60 judges during the 2007 emergency.
He is being held at his plush farmhouse, which authorities have declared a "sub-jail".
Officials have said the decision to hold Musharraf at his villa was made in view of threats to his life from the Taliban and other militant groups.
Musharraf returned to Pakistan last month after nearly four years of self-exile, promising to "save" the country from economic ruin and militancy.
However, he was barred from running in the May 11 general election, which will mark the first democratic transition of power in Pakistan’s history.
He is facing several serious criminal cases.
Lawyers have petitioned the Supreme Court to put him on trial for treason for imposing emergency and he also faces charges over the death of Baloch leader Akbar Bugti in a 2006 military operation.
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