President Pervez Musharraf swore in the 18 people he selected to run the country until the January election. The new government is headed by Pakistan Senate chairman Mohammadmian Soomro, an ally of Musharraf.
Bhutto talked to reporters waiting outside her compound in Lahore a few hours after the government lifted her home detention, The New York Times reported.
"Do we want to deny this nation its true legitimate leadership?" she said. "The West's interests lie in a democratic Pakistan."
Bhutto said she is no longer interested in talking to Musharraf or forming a political alliance with him and instead plans to form a coalition with former Prime Minister Nawaz Sharif. She said she discussed the situation with Sharif on Thursday.
A spokesman for Bhutto's Pakistan People's Party said that the interim government is closely tied to Musharraf and cannot be impartial in the election.