The grand alliance named Pakistan Awami Ittehad (PAI) will be headed by 74-year-old Musharraf, while Iqbal Dar has been appointed as Secretary-General.
Addressing media persons through video conferencing from Dubai, the former president said all parties representing Muhajir (migrant) community should be united, local media reported.
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About the nature of alliance, he said all the member parties will contest together with one name.
Musharraf denied reports that he was going to head the MQM, claiming that it was "ridiculous" to think that he would want to be head of a "minor, ethnic party".
"MQM-Pakistan is merely half of what the (original) party used to be," he said. "I am concerned about (the internal problems) of the party; however, I have no interest in replacing Farooq Sattar or Mustafa Kamal even if their parties are united," he insisted.
Criticising MQM, he said that the party and the muhajir community have lost respect. "The muhajir community would do better to abandon ethnic politics and join PAI," he said.
He expressed hope that Pakistan Muslim League-Quaid leaders Chaudhry Shujaat and Chaudhry Pervez Elahi would join his grand alliance as well.
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