Speaking at the youth interface rally held in Bindura, Grace also said Mutsvangwa and his colleagues in the Zimbabwe National Liberation War Veterans Association (ZNLWVA) deserved to be sacked from Zanu PF because they had become a problem.
But it was her claim that Chiwenga had handpicked Mutsvangwa to lead the war vets under the pretext that he had been sent by Mugabe which stunned the gathered crowd.
"I want to tell you the truth about Mutsvangwa. He was not elected. We are constantly being intimidated and threatened by Mutsvangwa that Mnangagwa has the support of the army.
"Mutsvangwa akanotorwa uko naChiwenga akanzi president ndovarikuda iwewe (Mutsvangwa was brought by Chiwenga and told that the president wants you to lead the war veterans).
"President havana kumbobvira vadaro (the president never said that). President is a very democratic person," Grace said.
"So, Mutsvangwa deserved to go. He deserved to leave this party. Nekuti iny'any'a (he is troublesome). Haana kukwana (He is not normal). Pasi naye (down with him)," she added.
Mutsvangwa said he had no time to respond to Grace's accusations.
"I am a revolutionary. I don't comment on hyperactive nonentities. The man who mattered most, the president, dispensed with frivolities and made quite a refreshing speech today (yesterday) in Bindura when he talked about real challenges that we face in building the modern statecraft," he said.
"He (Mugabe) also focussed on the collective national sacrifice for the independence of the country ... I played my modest part in that with so many youths of that epochal 1975/6 Samora Machel-Soweto Generation.
Although Chiwenga stands accused of backing Vice President Emmerson Mnangagwa in the Zanu PF succession wars, he has publicly distanced himself from the former liberation's movement's ructions.
Ruling party insiders say Grace is backing the Generation 40 faction which is fiercely opposed to Mnangagwa succeeding Mugabe.
Speaking in June, Chiwenga labelled one of the alleged kingpins of the G40, Higher Education minister Jonathan Moyo as enemy of the State — after the Tsholotsho North legislator appeared to slam the Command Agriculture programme, a government-backed food security initiative which involves the military among other players.
Chiwenga issued a lengthy statement in the State-run Herald newspaper, in comments which attracted sharp criticism from opposition political parties.
Chiwenga justified what was interpreted as encroachment into civilian matters by saying food security was one of the pillars of national security, adding that an attack on the programme was an attack on the economy.
"When you attack the economy you become the enemy of the State ... This guy (Moyo) who is vomiting that nonsense, didn't he get support from Command Agriculture.
"He has some other forces behind him? Hasn't he written books that he is going to destroy Zanu PF from within? We read. We are all educated. We read. He has said that.
"Everyone must see. He rebelled before. Not once. He rebelled when we were in the struggle, he ran away. When he ran away he did all his nonsense . . .
"And in his book, when he was teaching, his commentary on why he went to America — we know. When he left and went independent, was he repentant?
"And we know now that the tweeting is coming from Baba Jukwa and company, we know that. But I think he has got to where we wanted him to. Let me leave it at that," Chiwenga thundered then.
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