Musharraf's opponents had argued that his election was illegal because he was still head of the army.
Most of the challenges were rejected earlier this week.
The move clears the way for Musharraf to stand down as army chief, as promised, and be sworn in as a civilian leader.
He is widely believed to have declared a state of emergency earlier this month in order to purge the Supreme Court that he suspected was about to rule against his re-election, says the BBC's Barbara Plett in Islamabad.
Final challenge
"Dismissed," Chief Justice Abdul Hamid Dogar said in court after hearing the petition, reports Reuters news agency.
Musharraf's top legal adviser, Sharifuddin Pirzada, told Reuters there was now no legal obstacle to his re-election.
"Now the court has to give us this in writing," he said.
The verdict was expected to go in Gen Musharraf's favour since he has appointed new judges to the bench who are considered more loyal.
President Musharraf has still not lifted emergency rule, despite pressure from his Western allies.
He says the parliamentary and provincial elections, due to be held in January, can take place under the emergency decree.
The decision was provisionally expected on Thursday.
Former prime minister Benazir Bhutto, leader of
Other opposition leaders like Imran Khan have already said they would not take part in the elections.
Meanwhile, President Musharraf has amended the constitution to prevent future legal challenges to his actions.
A Pakistani policeman checks his rifle prior to an anti-Musharraf demonstration in