Musharraf was charged with murder, conspiracy to commit murder and facilitation of the murder of the two-time former premier along with seven other co-accused.
This is the first time a former military ruler or an army chief has been indicted in a murder case in Pakistan, which has been ruled by the military for most of its 66-year history.
The 70-year-old former President was brought under heavy security to the anti-terrorism court in Rawalpindi. If convicted, he can be sentenced to death or life imprisonment.
"Musharraf denied the allegation today in court," Aasia Ishaq, spokesperson for his All Pakistan Muslim League, told PTI.
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She said the charges against Musharraf were "politically motivated" and a legal team will continue to defend him.
Ishaq said the court has fixed the next hearing on August 27 and Musharraf will face the trial.
"He was not in the list of accused till 2008 but later his name was included on the basis of an email by Benazir to the US journalist Mark Segal," said Ishaq.