The shift could be good news for President Barack Obama's efforts to strike an agreement with Iran aimed at stopping the country from building a nuclear weapon. Menendez was a leading Democratic skeptic of a potential deal, having partnered with Republicans to sponsor legislation that would restrict the White House's room to negotiate a deal to lift economic sanctions on Iran without congressional oversight.
The move to replace Menendez as ranking member came on the same day that top U.S. and Iranian negotiators announced that they had achieved a framework for an agreement and hoped to finalize it in the next three months.
The New Jersey Democrat maintained his innocence and vowed to stay in office.
"I'm confident: At the end of the day, I will be vindicated," he said Wednesday.
As part of the committee shifts, Reid's office also announced that Sen. Jeanne Shaheen would become ranking member of the Small Business Committee.