Musharraf, 70, will be kept in the Critical Care Unit (CCU) of PNS Shifa, a technologically advanced naval medical treatment facility.
However, his spokesperson and party denied the report.
According to a report in the Express Tribune, special arrangements have been made at PNS Shifa for the former president's treatment and security.
A special team of doctors has also been constituted for his treatment. Banners have been displayed outside the hospital to stop the movement of irrelevant people, the paper said.
Meanwhile, Musharraf's newly-appointed lawyer Farogh Naseem said he had no idea of any such move being planned.
"Imagination knows no bounds," Musharraf's spokesperson Raza Bokhari told PTI.
Asked if he would be shifted, he said, "Of course not."
Musharraf's All Pakistan Muslim League party spokesperson Aasia Ishaque said his house has been declared as a satellite facility of the Armed Forces Institute of Cardiology in Rawalpindi.
A cardiologist is with him and there is an ambulance on standby in case anything happens, she said.
Analysts say if Musharraf is shifted to Karachi, it would be a ploy to keep him out of Islamabad and away from the courts.
However, analysts say such a move is unlikely as Musharraf is under heavy security and Islamabad or Rawalpindi are much safer than Karachi where the Taliban, who have vowed to attack him, have a strong grip.
Since Musharraf is under threat from terror groups, heavy security has been given to him and all his routes are thoroughly checked before he gets out.
After his return to Pakistan from self-exile in March last year to take part in elections, Musharraf has faced prosecution in four major cases, including for his alleged involvement in the murder of former prime minister Benazir Bhutto in 2007 and the killing of Baloch nationalist leader Akbar Bugti in 2006.
