His lawyers said this was the last case in which he was still under arrest and he had already been granted bail in all other cases against him, including those related to the assassination of former premier Benazir Bhutto and the imposition of emergency in 2007.
"He has been granted bail in the last case for which he was under arrest. He is a free man now," Ilyas Siddiqui, one of Musharraf's lawyers, told PTI.
"He has already been granted bail in the judges' case as well as the Bhutto case."
Aasia Ishaque, spokesperson of Musharraf's All Pakistan Muslim League party, said he will not leave the country.
"Musharraf is not going to leave the country. He will continue to stay in Pakistan and fight the politically motivated cases," she told PTI.
A three-judge bench today set Musharraf's bail in the Bugti murder case at two surety bonds of Rs 1 million each.
The Balochistan High Court had turned down the former President's bail petition, after which he appealed in the apex court.
Welcoming the verdict, Ishaque said: "It was due for a very long time. I'm happy that the Supreme Court gave him bail.
"Before granting bail, the bench noted that there was no evidence of conspiracy against Musharraf in the Bugti murder case. That is more important to us."
Musharraf is currently being held at his farmhouse on the outskirts of Islamabad, guarded by nearly 300 policemen, paramilitary personnel, soldiers, snipers and anti-terrorism officers.
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