The surprise ruling jeopardizes Musharraf's bid to secure a new five-year term in Saturday's vote by lawmakers and clouds the gathering prospect of a liberal, pro-U.S. alliance with former Premier Benazir Bhutto.
Musharraf's opponents in the election are contesting whether he can run for office while still serving as army chief, claiming it is unconstitutional. They had asked the Supreme Court to delay the vote.
Presiding Justice Javed Iqbal said the election by the national and provincial assemblies could take place on schedule. But he said the official results could only be announced after it had ruled on the petitions.
He said hearings will resume on Oct. 17 - meaning that even if Musharraf receives the most votes, he would have to wait at least 11 days before knowing whether he could take up office.
His current presidential term expires Nov. 15.
"Pakistan will be in a state of political limbo for quite some time," said analyst Talat Masood.
The government said it would respect Friday's decision.
"We have always accepted and respected court rulings, and we also accept today's ruling," Deputy Information Minister Tariq Azim said.
Still, Prime Minister Shaukat Aziz said government lawmakers were determined to re-elect Musharraf on Saturday and forecast that the election process would "proceed unhindered."
A lawyer for retired justice Wajihuddin Ahmed, Musharraf's chief presidential rival and one of the petitioners, acknowledged that the triumph was partial.
"We have achieved 60 percent victory," lawyer Khan told The Associated Press outside the courtroom. "We are very hopeful that we will be successful in the Supreme Court."
Musharraf, who seized power in a 1999 coup, has seen his authority and popularity slide since he made a botched attempt to fire the Supreme Court's chief justice in March. His administration has also struggled against a wave of Islamic militancy.
He has promised to quit his army post and restore civilian rule by Nov. 15 if he wins re-election.
However, Attorney General Malik Mohammed Qayyum said on Geo television that he might continue as military chief if the court proceedings drag on.
Qayyum said he hoped a ruling would come within a week after hearings resume. He also said the unofficial result of the election could still be announced after Saturday's vote, although the official notification would have to wait for the ruling.
The Election Commission declined to say whether there would be a fresh election or if the second-placed candidate would become president, if the winner of Saturday's ballot was disqualified.
"This is a very sensitive matter. No comment," commission secretary Kanwar Dilshad said.
Ikram Sehgal, a political analyst and newspaper columnist, predicted Musharraf's allies would cast a proportion of their ballots for Senate chairman Mohammedmian Soomro, who was fielded in the event that Musharraf is disqualified.
Bhutto's party has also nominated a candidate, but with the political deal with Musharraf in the offing, it was not immediately clear whether he would run or not.
Other opposition parties have already quit Parliament to erode the legitimacy of the election - meaning that they can muster few votes to challenge Musharraf and his covering candidate. On Friday, 35 lawmakers resigned from the assembly in North West Frontier Province.
Musharraf signed an amnesty quashing corruption cases against Bhutto and other politicians Friday - likely heading off a threat to withdraw her Pakistan People's Party lawmakers from the assemblies.
Musharraf is reaching out to Bhutto in order to broaden his support and underpin an effort to counter extremism and terrorism.
"This is the biggest challenge which we have to address, otherwise Pakistan will not be able to progress," Musharraf said on Dawn News television on Thursday.
Sheikh Rashid Ahmed, a senior minister, said on Geo television that the Cabinet approved the ordinance Friday and sent it to Musharraf for his signature.
The government said the ordinance would set up a parliamentary ethics committee to prevent the use of corruption allegations to harass political opponents.
To protect parliamentary elections due by January from fraud, it also amends election rules so that a copy of the result of a ballot is given to all contesting candidates.
Bhutto said she would judge the ordinance only once it was promulgated and published.
Bhutto, who plans to return from exile on Oct. 18, also wants a constitutional amendment to let her seek a third term as prime minister and a reduction of the president's sweeping powers. Officials in her party said those issues could be resolved later.