But Powell stressed that the clemency for Abd al-Qadir Khan, the father of Pakistan's nuclear bomb, was a domestic question for Musharraf, who has emerged as a key US ally since the 11 September 2001 attacks on the United States.
"This is a matter between Mr Khan, who is a Pakistani citizen, and his government. But it is a matter also that I'll be talking to President Musharraf about," Powell told reporters at UN headquarters in New York.
The top US diplomat said "goal number one" was making sure that no further sensitive nuclear details were passed on by any Pakistani scientists, including Khan, dubbed by Powell the "biggest" of all nuclear proliferators.
"This is a success for the international community, for those of us who have been pressing all governments to go after these kinds of proliferators," he said.
"I'm pleased that President Musharraf realised that he had to do something about this network."
Khan on Wednesday admitted leaking secrets and begged for forgiveness after a lengthy investigation into the alleged transfer of nuclear technology to Iran, Libya and North Korea.
Still a hero
But Musharraf said the scientist was a hero for bringing the bomb to Pakistan, seen as a vital part of the national defences against nuclear-armed rival India, and granted him a pardon.
Protesters in Pakistan express
support for the nuclear scientist
Musharraf said Khan had made "mistakes" and that he had decided to pardon him because of his services to enhancing national security.
"He is still my hero because he made Pakistan a nuclear power," the Pakistani leader said.
Powell refused to be drawn by a reporter's question about whether the pardon sent the wrong message to other would-be proliferators.
UN Secretary General Kofi Annan meanwhile stressed the Khan affair indicated that proliferation is "alive," noting that Musharraf was faced with a "difficult situation" because of Khan's hero status to many in the country.
"There has been quite a lot of black market activities that we have not been aware of or have not been able to contain," Annan said.
UN chief Kofi Annan admits the
pardon 'sounds odd'
Admitting that it "sounds rather odd" to have pardoned Khan amid efforts to stop the spread of nuclear weapons, Annan said: "Obviously the president of the country has to manage his own national situation."
He added: "What is important is the commitment that they are going to plug the loopholes and deal with everyone involved severely."
Five scientists and administrators from Pakistan's main uranium enrichment facility were arrested on Wednesday.
The UN's atomic watchdog said on Friday it would continue with an enquiry into black-market nuclear trading.
But Musharraf has rejected demands to reveal documents or allow the International Atomic Energy Agency (IAEA) to inspect its nuclear facilities.
"This is a sovereign country, no documents will be submitted to the IAEA," he said.
The Pakistani leader said IAEA officials would be welcome to visit and that Pakistan would discuss the results of its own investigation.