Referee Andreas Pappas made the decision 30 minutes after the game was scheduled to start, and immediately after that was announced to spectators, fans ran onto the pitch and fought with riot-trained police.
Plastics seats at Panathinaikos's home ground were thrown onto the pitch and the police used tear gas on the sold-out crowd of 23,000.
Greek police said at least five individuals were arrested and a number of people were injured in clashes.
The 80-year-old told Greek TV channel Nova: "The new law is clear, the match should not be played. We do not play in a jungle".
Panathinaikos could face a heavy fine and a points deduction after the incident and their rivals could be awarded a 3-0 victory.