"I'm here to apologize," the chancellor said. "I really feel horrible for what happened Friday."
Katehi left the stage under heavy escort with shouts from students to resign.
The university announced Monday that campus Police Chief Annette Spicuzza, who apparently was on scene during the incident, was put on administrative leave. Two officers were also put on administrative leave over the weekend.
Viral videos show officers dressed in riot gear in front of a crowd of protesters with their arms intertwined. One officer can clearly be seen calmly and liberally dousing a line of seated students with pepper-spray at close range.
"It felt like hot glass was entering my eyes," said David Buscho, a student who was pepper-sprayed. "I couldn't see anything. I wanted to open my eyes, but every time I did, the pain got worse."
Spicuzza said both officers were trained in the use of pepper spray as department policy dictates, and both had been sprayed with it themselves during training. The police chief explained the officers' actions by saying the students encircled them and her officers felt trapped.
"I know some people, many people, are very disappointed and/or shocked by what they saw," Spicuzza said.
Monday morning, Katehi spoke exclusively with ABC News.
"This video is horrible. What it shows is really, very appalling for all of us and really shows a face of the university that we don't have," said Katehi.
Katehi said she takes full responsibility for the incident but won't resign.
"I really feel confident that at this point, the university needs me as there are so many critical issues to be addressed, and we really need to start the healing process and move forward," Katehi said. "There are so many things we need to learn about the horrible incidents and we need to really spend time trying to understand what happened and move on."
The chancellor has said she plans to fast track an investigation of the incident, pushing the normal 90-day deadline to 30 days. She said she plans to assemble a task force to conduct the school's investigation into the matter and has called on the local district attorney to investigate the use of force.
The Davis Faculty Association is asking for Katehi to step down for what they call a "gross failure of leadership."
As the fallout continues from the incident, students have demanded accountability from more than just the officers who sprayed the protesters. They are calling on the chancellor to resign.
The president of the University of California system said he plans to assess the law enforcement procedures on all 10 campuses.
"Free speech is part of the DNA of this university, and non-violent protest has long been central to our history," UC President Mark G. Yudof said in a statement Sunday in response to the spraying of students sitting passively at UC Davis. "It is a value we must protect with vigilance."
The Associated Press contributed to this report.