President Mutharika won the election in 2014 two years after his brother, Bingu wa Mutharika, died while serving as president.
Malawi has been beset by corruption scandals, including an official anti-graft report last year that accused Mutharika of receiving money from a contractor supplying food rations to the police.
The president himself was elected after his predecessor Joyce Banda was embroiled in the “cashgate” scandal in which ministers and government officials syphoned off tens of millions of dollars of public money.
Foreign aid — on which the southern African state is dependent — was temporarily frozen over the revelations.
Banda returned to the country in April after four years of self-imposed exile and is also set to run in the elections, scheduled for May 21.
Food shortages, power outages and ballooning external debt have hurt the president’s popularity.
But Chilima’s chances of launching a serious challenge to Mutharika remain uncertain, and he did not rule out a deal with Banda.
“A meaningful alliance is a good idea,” Chilima, a devout Catholic, said, adding his party “desired a country of equal opportunity. We desire a country where citizens are happy.”