According to the source, Mugabe was assured that his safety would be protected in his home country as part of a deal that led to his resignation.
Mugabe ruled Zimbabwe for close to four decades but stepped down on Tuesday after the army seized power and the ruling party turned against him.
He led Zimbabwe from independence in 1980.
A government source said Mugabe, who is 93 years, told negotiators he wanted to die in Zimbabwe and had no plans to live in exile.
“It was very emotional for him and he was forceful about it,” said the source, who is not authorised to speak on the details of the negotiated settlement.
“For him, it was very important that he be guaranteed security to stay in the country…although that will not stop him from travelling abroad when he wants to or has to.”
Mugabe’s rapid downfall was triggered by a battle to succeed him that pitted Mnangagwa against Mugabe’s wife Grace.