"The MDC ... will contest the run-off," he said.
"I am ready, and the people are ready for the final round."
'Unfettered access' call
Tsvangirai said that full access for international observers and media was a pre-condition for his participation in the run-off against Mugabe.
"We want unfettered access of all international observers. The ZEC [Zimbabwe Electoral Commission] has totally discredited itself to a point now they are partisan to the [ruling] Zanu-PF. The reconstitution of ZEC is therefore paramount," he said.
"Media access should be unfettered, both print and international media," he said, listing the conditions for his participation in the run-off after disputed March 29 polls."
He also called for an end to violence and asked the Southern African Development Community to send peacekeepers to monitor the upcoming presidential run-off.
Tsvangirai said previously he won the first round outright and that official figures showing a second round is necessary are fraudulent.
The US has also called for the deployment of election and UN human rights monitors in Zimbabwe.
Gordon Johndroe, a White House spokesman, said: "We'd like to see election monitors come in, we'd like to see UN human rights monitors come in and ensure that we have a safe electoral process there."
"If this is going to be a successful run-off, obviously that's the first thing that has to happen - opposition leaders and their supporters must be able to freely campaign free of violence."
Patrick Chinamasa, Zimbabwe's justice minister, ruled out on Saturday accepting any pre-conditions.
"The runoff will be held within the framework of the constitution and the electoral laws. There will be no conditionalities that will be outside this framework," he said.
Chris Mutsvangwa, another official of Mugabe's ruling Zanu-PF party, rejected outright Tsvangirai's conditions for a run-off vote.
Speaking to Al Jazeera's Supa Mandiwanzira, Mutsvangwa said: "The truth of the matter is - this is like a soccer match where after 90 minutes there is a penalty shootout.
"You don't try to bring in new referees; you don't try to bring in new linesmen ... because all these people that Morgan wants to come into Zimbabwe are Western countries. That is his definition of what is the international community: The US, Britain and the EU."
The MDC maintains that Tsvangirai won over 50 per cent of the first round vote, making a run-off unnecessary.
But official results gave him a smaller margin of victory over Mugabe.
Under the terms of Zimbabwe's electoral law, any boycott by Tsvangirai would effectively hand victory to Mugabe, who has ruled the former British colony since independence in 1980.
The MDC's announcement came as Thabo Mbeki, the South African president, ended a one-day visit to Zimbabwe for talks with Mugabi.
Mbeki met Mugabe on Friday in Harare, as the MDC demanded that Mbeki step down as mediator in the crisis.
Mbeki was on his third visit on behalf of the Southern African Development Community, and was met at Harare's international airport, where he walked hand in hand with Mugabe and was decorated with flower garlands.
The talks lasted for nearly four hours, after which Mbeki returned to South Africa.
He did not talk to any other government officials or opposition leaders.
The MDC have called for Mbeki to be dismissed as a mediator due to his "softy-softly" approach towards Mugabe.
Tsvangirai has said that he "has no confidence in Mbeki" and voiced his approval of Levy Mwanawasa, the Zambian president, taking over mediation.
Mwanawasa has been more critical of Mugabe than Mbeki.