Tens of thousands of supporters attended the rally where he said he would fight with his “last drop of blood” but also said he would not call on them to march on the capital, Islamabad.
“They [government] cannot deal with a march in Islamabad,” Mr Khan said in Rawalpindi, near the capital. "They can call as many police as they want, but they cannot stop the hundreds of thousands from entering Islamabad.
“We could have created a situation like Sri Lanka. I have decided against marching on Islamabad because I don’t want there to be anarchy in the country. I don’t want to cause any harm to this country.”
Security was tight for the rally, which was Mr Khan’s first appearance since he was shot in the foot in what he alleges was a botched assassination attempt by senior government officials, including Prime Minister Shehbaz Sharif.
Mr Khan has staged protests nationwide pushing for early elections since being ousted from power in April.
Saturday’s rally was part of the “long march” protest by Mr Khan's party, the Pakistan Tehreek-e-Insaf (PTI), which was to have culminated in a march to Islamabad next week.
“I have seen death from up close,” said Mr Khan, who hobbled to the stage with a walking frame and spoke to supporters from a plush seat behind bulletproof glass.
“I'm more worried about the freedom of Pakistan than my life,” he told the crowd. “I will fight for this country until my last drop of blood.”
He said the PTI party would leave all regional and national assemblies and get out of "this corrupt system.”
His party resigned from the national assembly en masse in April, but most of the resignations have yet to be accepted.
Saghir Ahmed, a 32-year-old tailor, said Pakistan's dire economic situation — rampant inflation and a diving currency — had made life “unbearable”.
“We hope Mr Khan will introduce some reforms and the situation will improve,” he said.
Mr Khan attracts devotion from supporters, but on Saturday made his speech separated from them by coils of barbed wire and a buffer of police officers.
A police official told local television channel Geo TV that there were 10,000 personnel deployed for the event, with snipers positioned at various points for his security.