On July 31, 2014, Dermendzhiev replaced Stoycho Stoev as head coach at Ludogorets following the latter's disappointing 0-0 home draw against Partizan Belgrade in a Champions League qualifying match.

On 27 August 2014, Dermendzhiev became the second Bulgarian manager (after Stanimir Stoilov in 2006) to qualify a team from his country to the group stage of the Champions League.

[2] On 22 October 2014 he became the first Bulgarian coach to achieve a win in the Champions League's group phase when Ludogorets beat Basel.

[3] He resigned from the team on 31 May 2015, but after Ludogorets was unsuccessfully led by his successors Bruno Ribeiro and Eduard Eranosyan, he was appointed again as manager on 6 November.

[9] In October 2019, Dermendzhiev was appointed as head coach of the national team to manage the side during the remaining Euro 2020 qualifiers.