He defended his actions in a national address, saying he was curbing a rise in extremism in Pakistan.
Chief Justice Iftikhar Chaudhry has been replaced and the Supreme Court surrounded by troops, who also entered state-run TV and radio stations.
The moves come as the Supreme Court was due to rule on the legality of Gen Musharraf's October election victory.
The court was to decide whether Gen Musharraf was eligible to run for re-election last month while remaining army chief.