The Islamabad High Court said anti-terrorism court Judge Kausar Abbas Zaidi could conduct 69-year-old Musharraf's trial at his farmhouse in the suburb of Chak Shahzad.
The court gave its ruling after its Registrar and Zaidi reviewed security arrangements at the farmhouse.
The anti-terrorism court is hearing a case against Musharraf for detaining dozens of members of the superior judiciary after imposing emergency rule in 2007.
Islamabad had no anti-terrorism courts till recently and the court was created specifically for Musharraf's trial.
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Zaidi also informed the Islamabad High Court in writing about his security concerns.
Zaidi had sought the establishment of a courtroom within Musharraf's farmhouse and a bulletproof vehicle for his personal use due to security concerns associated with the high-profile case.
Reports said the administration of Islamabad had set up the courtroom and asked the Cabinet Division to provide a bulletproof car to the judge.
The anti-terrorism court is currently located in the congested district and sessions court complex in Islamabad.