Before boarding her flight Bhutto told reporters: "Pakistan is standing at a very critical juncture. One route leads to democracy, and the other leads to dictatorship."
Security in Pakistan has been tightened ahead of the former leader's return.
End to dictatorship
For years, Bhutto has said she will return to Pakistan to put an end to the military's position in power.
But now she is returning as a potential ally for General Pervez Musharraf, Pakistan's president and the army chief who seized control in 1999, in an upcoming general election.
The US is believed to have encouraged their alliance in order to keep Pakistan, its ally, committed to fighting al-Qaeda and supportive of Nato's work in Afghanistan.
The former leader's imminent return appeared to please investors, with the Karachi Stock Exchange (KSE) benchmark 100-share index up around one per cent, amid the hope that her return bodes well for stability and democracy.
But the Pakistani authorities say that Bhutto could be a target for al-Qaeda fighters when she returns.
"She has an agreement with America. We will carry out attacks on Benazir Bhutto as we did on General Pervez Musharraf," the Reuters news agency reported Haji Omar, a Taliban commander in Pakistan's Waziristan tribal region, as saying.
"Pakistan needs a military leader who can control both civil and possible military extremism"
Creative_person01, Islamabad, Pakistan
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Bhutto herself has said she could be a target, saying she might be attacked by Afghan, Arab and Red Mosque fighters on her return.
But students at the Red Mosque in Islamabad described her comments as ridiculous, and said they did not believe in such killings.
"An attack on a leader as insignificant as [Bhutto] would be a sign of great desperation, disorganisation and demoralisation on the part of our cadres," Abu Hafs, a spokesman for the mosque, said in a statement.
About 20,000 security personnel have been deployed in a security operation to protect Bhutto, with bomb squads sweeping the proposed route of her procession into the city.
She will be protected by bullet-proof screens as she rides in a specially modified shipping container in the procession, which could take up to 18 hours as it moves from the airport to Bhutto's home.