Levski, Bulgarian champions on 26 occasions, were unveiling Petev after sacking Serbian Slavisa Jokanovic earlier on Tuesday following a mediocre start to the new season.
Petev, 38, is considered to be one of the best young coaches in the Balkan country after leading Ludogorets to back-to-back league titles but Levski fans believe he is a supporter of bitter city rivals CSKA Sofia.
Several dozen hostile fans burst in shortly after the start of Petev's first news conference at the Georgi Asparuhov stadium, shouting: "You're not welcome here. Get up, undress the shirt and go. Levski will not play under you as coach."
Petev was forced to remove his jumper and t-shirt to leave him topless in front of the media.
With no security officials present, the fans then ushered Petev out of the news conference before confronting shocked Levski chief executive Nasko Sirakov - a crowd favourite and the club's all-time leading scorer with 206 goals between 1981 and 1994.
"This is the hardest day in my life," said Sirakov, in announcing his resignation. "But I wonder if there's a place in the world where the fans choose the coach."
Petev was not immediately available for comment but Levski owner Todor Batkov labelled the incident as a "disgrace".
"It'a stain on our club, this is unprecedented... But we stand behind our decision - Ivaylo Petev is the new coach of Levski," he told reporters.
The Blues, as Levski - one of the two most popular clubs in the country are known, are sixth in the standings with 19 points, nine points behind leaders Ludogorets.
Petev, fired by Ludogorets after a surprise defeat in the opening round of the domestic championship, is Levski's fourth coach this year after former Levski players Ilian Iliev and Nikolay Mitov and Jokanovic.
Petev will have to deal with a hugely demanding and impatient fan base in attempting to guide The Blues to their first league title since 2009.