Islamabad and Washington have both blamed Mr Mehsud - who is based in the troubled region of South Waziristan - for the assassination of Ms Bhutto.
But Saleh Shah, an Islamist senator who represents Waziristan, says Mr Mehsud was not "in any way" involved.
Waziristan is now the scene of fighting between the army and militants.
Military officials say that Taleban militants and security forces have been involved in heavy exchanges of fire overnight on Tuesday.
'No Foreign fighters'
"Baitullah is not involved in Benazir's assassination in any way," Mr Shah told the BBC.
"He has communicated this to me through his spokesman."
Mr Shah also rejects recent CIA claims that Mr Mehsud is involved with al-Qaeda.
"I don't know where these stories come from - about foreign fighters in the area," he said.
"I have never seen any Arab or Uzbeks in the area."
The government however remains convinced Mr Mehsud played a role in Ms Bhutto's murder and has stepped up operations against militants in South Waziristan.
Mr Shah says the military action has done more harm to the civilian population than the militants.
"The army continues to fire at civilian targets, although the militants positions are quite distinct and removed," he says.
Mr Shah says several civilians belonging to the Mehsud tribe have been taken into custody, and many people now have no option but to leave their homes.
"Ladha [one of Waziristan's main towns] is now deserted as the government has stopped all trade into the area," he says.
"Hospital and schools have been closed down, and food supplies are running low.
"The army has launched a blockade of the area for the last 10 days."
Mr Shah says the government's failure to honour previous peace agreements has led to the current fighting.
He says the jirga, or tribal council, in this regard was held on Monday but has not yielded any results.
'Self-defence'
Maulana Ataur Rahman, a local leader from the area, told the BBC dialogue was the only hope of ending the fighting.
He said the pro-Taleban leadership had no desire to fight the Pakistani army, or the government.
"Baitullah has said himself several times he has no quarrel with the Pakistan army."
"Whatever he is doing is in self defence for the attacks against him and his men. For them, the main battle is in Afghanistan."
(courtesy - bbc news)