On China's border aggression against India, Mahathir said that India and China should sit down and settle this problem.
The Parliament sitting was dismissed right after the speech, with all policy discussion and debates shelved until the next session in July.
Muhyiddin Yassin will be sworn in on Sunday, royal officials said, after a week of turmoil that followed the collapse of a reformist government and Mahathir's resignation as premier.
Last week, India imposed restrictions on imports of refined palm oil and palmolein in the backdrop of adverse remarks by Mahathir on the new citizenship law and the Kashmir issue.
Malaysian Prime Minister Mahathir Mohamad criticised the Citizenship Amendment Act (CAA) on the sidelines of the Kuala Lumpur summit on Friday.
The Malaysian PM had reportedly said, I am sorry to see that India, which claims to be a secular state, is now taking action to deprive some Muslims of their citizenship.
The pardon allows Anwar to re-enter active politics immediately, but it was not clear what his role in government would be.