The Pakistani president met his Afghan counterpart Hamid Karzai shortly after arriving on a two-day trip that comes amid calls for Islamabad to do more against Taliban and al-Qaeda fighters based in Pakistan's tribal areas.
With ties frayed between the two neighbours over who is to blame for cross-border movement of militants, Musharraf said mutual trust was essential if the insurgency in Afghanistan was to be quelled.
"The only course left is to have trust - kill mistrust, don't blame each other.
"If we don't trust each other, there is no moving forward. If we carry on the course of accusations and counter-accusations, we will never achieve peace and we will never be brothers."
"Not hiding Osama"
The Muslim neighbours had a heated exchange this year after Musharraf dismissed Afghan intelligence about Taliban and al-Qaeda leaders allegedly living in Pakistan as "nonsense".
The Pakistani president said his country and Afghanistan were battling the threat of al-Qaeda, the Taliban and the "Talibanisation" of society.
"If we don't trust each other, there is no moving forward. If we carry on the course of accusations and counter-accusations, we will never achieve peace and we will never be brothers"
"After 9/11, we are seeing the scourge of terrorism. This terrorism was in the form of al-Qaeda, it still is, but it has now transformed and taken the form of Talibanisation," Musharraf said. "We have to fight both."
Musharraf assured Afghanistan on Wednesday that his country was "fighting terrorism in all its forms [and] whatever we are not achieving is not through intention".
He rejected speculation that Pakistan's government or intelligence agency were hiding Osama bin Laden.
"It's very difficult to get him, as maybe it is difficult to get [Taliban leader] Mullah Omar in the Kandahar region ... Mullah Omar is not in the bag, Osama bin Laden is not in the bag.
"Please don't think that somebody is collaborating and letting him live there in hiding and the government of Pakistan is hiding him and ISI [Pakistan's military intelligence service] is hiding him."
No foreign forces
Musharraf also said Pakistan would never allow foreign forces - hunting al-Qaeda and Taliban fighters on the Afghan side of the border - onto its side of the border.
"On our side of the border there will be a total uprising if a foreigner enters that area," he said. "It's not possible at all, we will never allow any foreigners into that area. It's against the culture of the people there."
The Pakistani leader gave reassurances that a "peace deal" reached by Islamabad on Tuesday with pro-Taliban rebels in the North Waziristan tribal belt along the Afghan border was intended to curb militant activity.
"On our side of the border there will be a total uprising if a foreigner enters that area ... we will never allow any foreigners into that area"
The deal was "no Taliban activity on our side of the border or across the border in Afghanistan", Musharraf said.
Karzai welcomed the agreement as a "positive step." He said Afghanistan would wait to see if it proved effective.
"Let's wait. If it works well, we are happy. If it doesn't work we'll find another way."
The Afghan leader also offered assurances to Pakistan that it was not allowing Pakistan archrival India to use Afghan soil for supporting tribal militants fighting against Pakistan's government.
"By the fact of the experience of the past 27 years of invasions, misery and interference, Afghanistan needs the best of relations with Pakistan," Karzai said.