The year after he retired, Krasimir became assistant coach of the club he had just retired from,
VfB Stuttgart. He stayed in this position for two years before deciding to become a player-manager at
VFC Plauen, where he remained for just a short time. He had been appointed on 16 January 2006 as a manager of
Grasshopper Club Zürich to replace
Hanspeter Latour who left for
1. FC Köln. Balakov won the
Intertoto Cup, thus qualified the club to the
UEFA Cup for 2006–07 season. He had been appointed on 29 October 2007 as a manager of
FC St. Gallen to replace
Rolf Fringer. Three days before the season ended, he was fired by the club management. In December 2008, he became manager of
PFC Chernomorets Burgas in his homeland, taking over from
Dimitar Dimitrov, after also having considered an offer to coach the national team of his country. On 6 December 2010, he was released from
PFC Chernomorets Burgas after mutual consent, following a change in the long-term vision for the club by the owner
Mitko Sabev. On 27 May 2011, it was announced that Balakov would take over the helm of Croatian club
Hajduk Split. On 22 March 2012, Balakov was appointed the manager of
1. FC Kaiserslautern. He was sacked on 17 May 2012, after being unable to prevent Kaiserslautern's relegation to the
2. Bundesliga. He subsequently continued his career as manager in his country. On 4 January 2018, he was announced as the new manager of
Etar Veliko Tarnovo with
Stanislav Genchev,
Iliyan Kiryakov and Kaloyan Chakarov as first team coaches. On 14 May 2019, he was named as the new manager of the
Bulgaria national team. In October 2019, Balakov was replaced as manager of the national team by
Georgi Dermendzhiev after resigning from his role following the backlash over his denial of alleged fan racism aimed at members of the England team in a Euro 2020 qualifying match as well as a continued string of unsatisfactory results. He took over as manager of
CSKA 1948 in June 2020. In late August 2020, Balakov's duties were extended to cover the organizational management as well, with assistant
Yordan Yurukov becoming more actively involved in the training process. However, the latter resigned on 22 September, leaving Balakov to be the sole one in charge of the team. In June 2021, Balakov parted ways with CSKA 1948, with the club's management thanking him for establishing the team among the stronger sides in the top division of Bulgarian football. In May 2023, Balakov returned to coaching, being appointed as manager of relegation-threatened
Septemvri Sofia. He was unable to save the team from the drop, but stayed on as manager in the
B PFG. Balakov left Septemvri in October 2023 due to disagreements with the club ownership. At the time his team was top of the standings. ==International career==