In reponse, Shevardnadze declared a state of emergency on Saturday vowing not to leave office.
"I will not resign. I will resign when the presidential term expires, according to the constitution," Shevardnadze said before he was driven away from the parliament, accompanied by armed guards in riot gear.
But Georgian opposition leader Nino Burdzhanadze said she was taking on the functions of the president from Eduard Shevardnadze.
"I, as chairman of the Georgian parliament, in accordance with the constitution, will take on the functions of the president until such time as it becomes clear whether he has the
ability to continue," Burdzhanadze told reporters.
Shevardnadze was whisked away after opposition leader Mikhail Saakashvili led hundreds of his supporters into the chamber. They overturned desks and chairs and leapt onto the podium just after the president officially convened the body.
"The velvet revolution has taken place in Georgia," Saakashvili said, as the hall applauded him. "We are against violence."
Thousands of Georgians vowed a
New leader announced
Protestors have pledged not to leave until Shevardnadze is ousted.
Saakashvili immediately handed over the podium to opposition leader Nino Burdzhanadze, who was the speaker in the last parliament.
"We tried not to allow what has happened but Shevardnadze has lost all chances for peaceful negotiations," she said, as her supporters were waving National Movement flags and cheering her on.
"We have won today and the most important thing now is to preserve peace. Those who try to steal our victory will be punished."
No violence reported
Events are still unfolding, but there have been no immediate reports of violence on the streets of the Georgian capital of Tbilisi. Police have been standing by passively, not intervening.
The poverty-stricken ex-Soviet republic had slid into its biggest political crisis in years after 2 November parliamentary elections, which the opposition and many foreign observers claimed were rigged.
Outside the parliament, the opposition seized control of the square that had initially been occupied by pro-Shevardnadze forces.
The massive crowd, carried placards reading, "Georgia without Shevardnadze" and "Shevardnadze, your century was the 20th. Now it is the 21st."
Calls for Shevardnadze's resignation reflect growing popular resentment at the widespread unemployment, poverty and chaos 12 years after the Soviet Union collapsed.