Bulgarian Prime Minister Boiko Borisov tendered his government's resignation in parliament on Monday.
Borisov resigned after his centre-right GERB party candidate lost the presidential election to a Russia-friendly politician Rumen Radev, who is backed by the opposition Socialists.
"I apologise to those who supported us. I thought I was doing the right thing... If Bulgarians want a political crisis then they shall have one," the 57-year-old Borisov told reporters on Sunday evening.
Bulgaria and Russia have deep historical, cultural and commercial ties and the country has long walked a tightrope in its relations with Moscow and the West. Bulgaria's outgoing president has been sharply critical of Moscow and Borisov's government angered Moscow by banning Russian supply flights to Syria from using its airspace last September.
"The results clearly show that the ruling coalition no longer holds the majority," Borisov pointed out.
Radev, a former air force commander, won Sunday's presidential election by a wide margin, partial official results showed. He won 59.4 percent of the vote though Borisov’s center-right GERB party’s candidate, Tsetska Tsacheva, only earned 36.2 percent.
Radev defended a pragmatic approach during the election process, saying that Bulgaria needs to balance the requirements of its EU and NATO membership with its relations with Russia.
Bulgarians have been worried about alienating an increasingly assertive Russia. The Black Sea state was also a former member of the Warsaw Pact, a communist union led by the Soviet Union.
In his victory speech, Radev reiterated his opposition to EU sanctions on Russia and praised new US President-elect Donald Trump for "seeking more dialogue" with the Russian President Vladimir Putin.
The resignation of Borisov's minority government is likely to result in months of political uncertainty and will probably spell an early parliamentary election in the spring - further delaying reforms and scaring away investment, analysts said.
Borisov said on Sunday he would not try to seek support to form a new government within the current parliament and so did opposition Socialists, making an early election virtually certain for Bulgaria.
Experts also saw Radev’s victory as a protest vote at Borisov's failure to improve the lot of ordinary Bulgarians, the average monthly salary is just 480 euros ($535), and to tackle rampant corruption.
If neither of three parties in the parliament manages to form a government, the outgoing president, Rosen Plevneliev, will have to appoint a caretaker government. But under the Bulgarian constitution, he would not be able to dissolve the chamber and call an early parliamentary election.
This would be the first task of Radev after he takes office in January.