The development is the first time that an acting or former army chief has been indicted for treason in Pakistan, where the military has taken power in three coups since the country was founded in 1947.
It's unclear whether the case will ever get to the verdict stage, however. Musharraf's lawyers are pushing for him to be allowed to go abroad to see his ailing mother.
The indictment - the latest high drama in a series of legal cases Musharraf has faced since returning to Pakistan a little over a year ago - showcases the tensions between a civilian government that initiated the case and the military, which has generally been above the law.
Musharraf, who appeared in court on Monday for only the second time since court proceedings began in December, pleaded not guilty and delivered a nearly 30-minute defense of his time in office.
The former general, who has been at a hospital in the nearby city of Rawalpindi since January, said he was appearing in the proceeding against the advice of his medical team.
''I am being called a traitor,'' he said. ''I put the country on the path of progress after 1999 when the country was being called a failed and a defaulted state.''
''Is this the way to reward someone for being loyal to the country and for loving the country'' Musharraf asked the court.
On a defense request that Musharraf be allowed to leave the country to see his ailing mother, the judges ruled that they didn't have the authority to remove him from an official exit control list that restricts his movements, essentially leaving the issue to the government.
The three-judge tribunal was constituted just to deal with the treason case.
A lawyer for Musharraf, Ahmed Qasuri, said the legal team would now decide whether to petition the government or the Islamabad High Court to allow him to leave.
If convicted, Musharraf could face the death penalty but it remains unclear whether the trial will ever get that far.
''The mother is dying, for God's sake,'' Musharraf's lawyer, Farogh Naseem, told the court. ''He will come back. He wants to face the trial. He wants his name to be cleared.''
The prosecutor, Akram Sheikh, expressed sympathy for Musharraf, and while he didn't say whether the former military ruler should be allowed to leave, he didn't object either.
After the proceedings, the prosecutor, who has often been part of testy exchanges between the prosecution and defense, walked up to Musharraf, greeted him warmly and the two chatted briefly.
The indictment had been expected back in December when the court first met. But Musharraf repeatedly failed to appear in court - first due to security concerns and then due to the health scare - leading to speculation that he was trying to avoid the embarrassing experience of subjecting himself to a civilian court.
He finally appeared before judges on Feb. 18 but was not indicted while they ruled on a defense challenge. Once that was settled the judges ordered Musharraf appear in court so the charges could be read and the trial proceed.
Security was tight Monday. All traffic near the courtroom was shut down to allow Musharraf's convoy to travel. Paramilitary Rangers and police took up positions inside the courtroom.
Musharraf's was rushed to a military hospital in early January, sparking speculation that the military was moving to protect him and that he would soon leave the country under guise of receiving medical treatment.
The 70 year old took power in a 1999 coup but was forced to step down in 2008. The high treason case stems from his decision to suspend the constitution on Nov. 3, 2007 and detain a number of judges.
Musharraf said Monday that he did not subvert the constitution and that his actions had been taken on the advice of the prime minister and the cabinet.
He returned to Pakistan last March with the hope of running in the national election held in May. But he was disqualified and has spent most of his time since battling legal cases.
The other case against Musharraf involve his alleged role in the murder of former Pakistani Prime Minister Benazir Bhutto, the death of a Baluch separatist leader killed by the army, the killing of a radical cleric and the detention of Pakistani judges. But the treason case is by far the most serious.