Ms Bhutto said she felt confident that the people of Pakistan would "rally around me" because they wanted democracy restored.
She faces possible corruption charges on her return to Pakistan.
She says he cannot be both president and head of the army.
Ms Bhutto wants to reestablish democracy in Pakistan which is now a military republic under Musharraf.
The BBC's Barbara Plett in Islamabad says it is not yet clear whether she will return as the general's opponent or his main political support.
President Musharraf once told Mrs Bhutto that she would be arrested if she returned to Pakistan – it now looks as if charges against her, and the efforts to track down the estimated $1.5bn she and her husband received in commissions and kickbacks, may be dropped in return for her political support.