Musharraf -- who once described his uniform as a "second skin" -- hailed Pakistan's armed forces as the world's best and said he had full confidence in Kiyani.
His resignation from the military meets a key demand of his US backers and the rest of the international community, that had until recently been happy to back him as long as he kept up the fight against Al-Qaeda and the Taliban.
"I will not be in uniform tomorrow," Musharraf, wearing a green sash over his khaki uniform and medals, told hundreds of invited guests and dignitaries, confessing to feeling "a little sad".
"After remaining in uniform for 46 years I am saying goodbye to this army. This army is my life, this army is my passion. I have loved this army."
Private Dawn television reported, citing unidentified sources, that Musharraf was set to scrap the emergency within 48 hours, but a senior government official told AFP the president was "still weighing the options."
"He has indicated to his aides that he would like to lift the emergency before the elections but it is not yet decided when to do it," the official said.
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