The military said the new missile, which has a range of 350km and uses stealth technology, is as accurate as Pakistan's longer-range Babur cruise missile, a version of which was test fired in July.
Saturday's test comes as political opposition to Musharraf has increased, prompting international concern about the security of Pakistan's nuclear arsenal.
"Every time you fire a missile there is a political connotation to it," Talat Masood, a defence analyst and retired army general, said.
"Pakistan has a very strong and robust missile programme and it can match any country, especially its adversaries. It is not lagging behind in its missile programme."
Pakistan and its nuclear-armed neighbour India have routinely conducted missile tests since both countries carried out detonations in May 1998.
Pakistan did not say if it had informed New Delhi in advance about the Ra'ad missile test.
The two countries have an agreement to notify each other about tests of ballistic missiles but not cruise missiles.
In 2004 they began a peace process aimed at resolving their dispute over Kashmir, the divided Himalayan region that has been the subject of two of their three wars.
In February, Pakistan signed a historic deal with India to reduce the risk of accidents involving nuclear weapons.