According to Aljazeera's correspondent, members of at least six Islamist groups walked out of the joint session of parliament shortly after the president began speaking.
Others drowned out his words with shouts of "Down with Dictatorships", "Go Musharraf Go! and "No Musharraf No!".
In the nationally televised spectacle, pro-military politicians banged their benches in support of Musharraf, who nevertheless remained unruffled and raised a defiant fist at the end of his speech.
Musharraf spoke about Pakistan's support for the US-led war on terror, efforts to combat "Islamic extremism", improving relations with India and nuclear-related issues.
"I appeal to you and Pakistan nation to wage jihad against extremism," Musharraf said amid the heckling.
Under the constitution, a president is required to address parliament after elections and at the start of each year, but Musharraf had been unable to do so because of a stand-off with the opposition since 2002 that had virtually paralysed the upper and lower houses.
Deal to step down
Musharraf's speech came after a deal with the country's Islamist alliance (Muttahida Majlis-e-Amal) last month that cleared the way for a 1 January vote of confidence that enabled him to stay in power until 2007.
Under the deal, which split the opposition, Musharraf agreed to step down as army chief at the end of this year and the Islamists backed constitutional changes giving him authority to dismiss the elected government.
"Down with Dictatorships", "Go Musharraf Go! and "No Musharraf No!"
Pakistani members of Parliament
Saturday's parliamentary session showed Musharraf has failed to win total support from the Islamists, who walked out en masse to show their opposition to Musharraf's support for the US-led "war on terror".
"The world is looking at Pakistan being the nucleus of extremism and the priority is to correct this concept and improve the picture of Pakistan before the world", said Musharraf.
On the country's nuclear programme, Musharraf said it was "an assurance for security and peace of the country and we will go on developing it".
Opposition members complained that some of their more vocal colleagues, including the leader of the Islamists Qazi Husayn Ahmad, were unable to attend the session after being prevented by authorities from disembarking from their plane in Islamabad.
Inside the house, protests were led by supporters of former prime ministers Benazir Bhutto and Nawaz Sharif, who were barred by Musharraf from returning from exile to contest general elections in October 2002.
While the vocal show in parliament is no immediate threat to Musharraf's rule, the public barracking could undermine the considerable popular support he enjoys despite seizing power in a coup from the deeply unpopular Nawaz Sharif.