The billionaire SpaceX boss unveiled his newest craft, Starship, and its launch vehicle called Super Heavy at the company's facility in Texas, Sky News reported.
He told a crowd of space fans gathered at the site that he believes the spaceship could act like a plane does — landing and taking off without being damaged.
Starship is designed to carry a crew and cargo "to the Moon, Mars or anywhere else in the Solar System" and land back on Earth perpendicularly instead of horizontally, Musk said.
Its inaugural liftoff is set for about one or two months and will reach 65,000ft before landing back on Earth.
"We need to make space travel like air travel," Musk said.
"Any other mode of transport is reusable so the critical breakthrough is a rapidly reusable orbital rocket — this is the holy grail of space."
Musk, SpaceX's chief engineer and CEO, said using a rocket again is "only barely possible" due to Earth's gravity — but is "not impossible."
He told the crowd of space fans that he wanted "a world where we're exploring other worlds."
Musk said his company has learned how to dock on Mars and wants to establish a city there, and also on the Moon.
"It will be very exciting to have a base on the Moon, even if it's just a science city," he said.
"Then we can go to other places in the Solar System, like Saturn. But we need to focus on the fastest path to a self-sustaining city on Mars.
"As far as we know, we're the only life we know about. If there were aliens, I'm pretty sure I'd know.
"I think we should really do our best to become a multi-planet species, and we should do it now."
Revealing details of the new Starship, Musk said it is 50 meters in length, weighs 120 tons and will have six engines, three of which move around and three fixed vacuum engines.
"In space geek terms, this is a really great number," he added.
Musk said the spaceship is made of steel which has a high melting point and is resilient to the elements — essential to keeping it intact when landing back on Earth.
"On Mars, you can cut it and meld it, no problem," he added.
"I'm in love with steel — had to say it," he joked.
Musk said Saturday marked the 11th anniversary of a SpaceX rocket reaching orbit for the first time, and said if that had not succeeded that would have been the end of the company.