The court ruled that there was no legal bar on foreign travel by 72-year-old Musharraf unless he is stopped by the federal government.
The court rejected the appeal by the government against a decision by the Sindh High Court which had also ruled that the former president can leave the country.
Musharraf's lawyer Farogh Naseem told media that the government had illegally stopped Musharraf from going abroad.
However, he also added that government has authority to stop anyone leaving the country by placing the name on the Exit Control List (ECL).
The issue of Musharraf's foreign travel arose when the government launched a high treason case against him in 2013 for suspending the constitution in 2007.
The government in April, 2014 banned Musharraf's foreign travels but the Sindh High Court in Karachi rejected the ban in a decision in June, 2014, which was challenged by the government in the Supreme Court.
The bench also disposed off Musharraf's application seeking one-time permission to proceed abroad for medical treatment on grounds that the petition was now infructuous.
The court turned down the plea of Attorney General Salman Aslam Butt for rejection of the Sindh High Court decision.
However, the apex court did not stop the government or the special court trying the former president for high treason from placing his name on the ECL, which lists names of people not allowed to leave the country.
He was indicted in April, 2014 but since then no progress has been made in the case for various reasons.
In January, Musharraf was acquitted by an anti-terrorism court in the 2006 murder case of Baloch nationalist leader Nawab Akbar Khan Bugti, the first major relief to the ex-army chief entangled in several high-profile cases.
He came to power in a bloodless coup in 1999, deposing then prime minister Nawaz Sharif. Facing impeachment following elections in 2008, Musharraf was forced to resign as president and went into self-imposed exile in Dubai.
Apart from the high treason case for abrogating the Constitution in 2007 and illegal detention of judges the same year, Musharraf has also been charged for the 2007 assassination of former prime minister Benazir Bhutto and the killing of a radical cleric in the Lal Masjid raid in Islamabad.
In January, 2014, Musharraf suffered a "severe heart attack" on his way to a special court to face high treason charges following which he was admitted to an army hospital.
He has been facing health issues and wants to go out for medical treatment, his lawyer Naseem said.
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