His temporary appointment brings an end to the tenure of Boyko Borisov, who had dominated Bulgarian politics since 2009.
Bulgaria's president has appointed a caretaker government ahead of the country's election on July 11.
Stefan Yanev, a close ally of President Rumen Radev who currently serves as his advisor on security and defence, was appointed prime minister.
Yanev had previously served as deputy prime minister and defence minister in an interim government appointed in 2017.
His temporary appointment brings an end to the tenure of Boyko Borisov, who had dominated Bulgarian politics since 2009. He had previously stated that he will not stand to lead the country's next government and "divide" the nation.
In a statement on Tuesday, Radev confirmed that he had dissolved the Bulgarian parliament that had emerged from April's election.
The conservative GERB party of former PM Borisov had come first in the election but failed to win a majority and found no party willing to form a coalition.
Bulgaria had been gripped by a series of corruption scandals over the autumn, which led to the GERB party losing seats in the vote.
The new anti-establishment party, There Is Such A People (ITN), who finished second in the polls, also failed to form a government, as did the third-place Socialists (BSP).
It marked the first time since the fall of communism in 1989 that Bulgarian parliamentary groups had failed to reach a compromise.
The dissolved parliament will also go down in history, having lasted less than a month in office since the election.
President Radev has warned that another split vote at July's election could risk seeing Bulgaria fall into a "political and constitutional crisis".
The latest opinion polls suggest the next election could have a similar outcome, which would add to the woes of the European Union's poorest member country.