Bulgaria’s 6-0 humbling at the hands of England was overshadowed by racist chants and Nazi salutes from the home crowd with the referee halting the game twice in the first half to address the issue.
UEFA have subsequently charged both Bulgaria and England fans for the racist chants and disruption of national team anthem respectively.
Balakov initially insisted he did not hear the racist chants but backtracked a few days later before making a public apology to England.
Bulgarian Police have so far made 12 arrests in the connection with the racist chants while four individuals have fined and handed two-year stadium bans.
"I am no longer national team coach," Balakov told Bulgarian media on Friday.
"I wish success to the next coach, the situation is not rosy at the moment."
"I have never been a coach in such an atmosphere.
"I tried to pick up the players in the locker room. There was no rebellion.
"The players were so mentally stressed by what was happening on the pitch that they lacked the energy to rebel."
Bulgaria are rock bottom of Group A in the EURO 2020 qualifiers, without a win their seven games so far.
"The performance of Bulgaria's men's national team in recent months has been described as unsatisfactory, which is why Krasimir Balakov resigned," a statement from the Bulgarian FA said.
