At least five former or current members of the Bulgarian military were arrested, said Siyka Mileva, spokeswoman for the general prosecutor.
The investigation was of "special significance" for the national security of Bulgaria, the EU, NATO and the United States, general prosecutor Ivan Geshev told the press.
Among those arrested was a former military attache, currently in charge of classified information at Bulgaria's parliament.
Another is a former high-ranking military intelligence officer in the Defense Ministry who was accused of being the head of the spy network, Mileva said.
The officer in question was allegedly trained by the Russian military intelligence and his task was to recruit an "illegal network of agents" made up of people who had access to classified information about Bulgaria, NATO and the European Union.
His wife, who has joint Russian-Bulgarian nationality, "played the role of intermediary between (the ex-officer) and the embassy of the Russian Federation," prosecution spokeswoman Siyka Mileva told a news conference.
She is accused of passing on confidential information about Bulgaria and its EU and NATO partners to "an employee of the Russian embassy," who in turn gave her money to pay the network.
It is believed the leader of the ring and the other members met at public places including tennis matches.
As evidence, the prosecution showed the press phone recordings and videos of visits to the Russian embassy.
The Russian embassy in Sofia demanded an end to speculation about an "alleged involvement of Russia in intelligence operations against the interests of Bulgaria."
It condemned attempts to "demonize" Moscow until a court provided a verdict on the case.
"We expect that speculation about Russia's alleged involvement in intelligence work against Bulgaria's interests will be halted until there is a court ruling," it said in a statement.
This is not the first spying scandal between the two nations in recent years.
Between October 2019 and the end of 2020, five Russian diplomats and a technical assistant at the Russian embassy were expelled from Bulgaria.
The discovery comes just before parliamentary elections in Bulgaria on April 4, with an openly pro-Russian party competing for the first time.