After retiring in 2004, Iliev pursued a career as a coach. In June 2004, he was appointed as a manager in his first club Cherno More Varna. However, on 3 March 2006, after a two years spell at the Sailors, he resigned after a home 0–1 loss against Rodopa Smolyan. Since 2006, he serves as the manager of Beroe Stara Zagora, making him one of the longest serving coach in a Bulgarian football club. Under his management in the 2009–10 season, Beroe won a historical first Bulgarian Cup and consequently achieved a participation in the UEFA Europa League qualification stages. Iliev has been voted best coach in the Bulgarian championship for the season 2009–10 by the association of Bulgarian football players.