Paez coached Venezuela for six and a half years, turning it into a respectable team, but he had fallen out recently with fans.
Much of the criticism concerned the fact that Paez picked his son, Ricardo, to play for the national team. During the Bolivia game in San Cristobal, fans demanded that Paez replace his son and resign.
"The soccer played by our beloved Red Wines has not been able to beat the inadequate atmosphere which surrounds the national team," Paez said in a letter to the Venezuelan federation. "This directly affects our professional responsibility to pick, lead and obtain results."
Paez's resignation came eight days after the resignation of Ecuador national team coach Luis Suarez, the only other holdover national team coach in South America from qualifying for the 2006 World Cup.