Justice department prosecutors allege Robert Menendez and his wife accepted hundreds of thousands of dollars in exchange for aid to Egypt's government.
The couple have denied the charges.
Senate majority leader Chuck Schumer said on Friday that Mr Menendez had decided to step down as chairman of the influential committee "until the matter has been resolved".
The New York Democrat said his colleague was "a dedicated public servant and is always fighting hard for the people of New Jersey".
During searches at the residence of Menendez and his wife, Nadine Arslanian, who is of Armenian origin, over $400,000 in cash, gold bars, luxury cars, and furniture have been seized.
The U.S. Department of Justice investigation claims that a New Jersey-based food business frequently gave lavish gifts to Nadine Arslanian.
The investigation has uncovered that originally facing federal bank charges, Fred Daibes is now alleged to have provided Senator Menendez with these gold bars in exchange for assistance with his legal issues. This startup company secured a lucrative contract with the Egyptian government to conduct all halal inspections for the US, despite lacking prior experience in the field.
Interestingly, after negotiations with the US Attorney’s Office in New Jersey, Daibes, who initially faced a potential prison sentence of over a decade, ultimately received probation.
Senator Menendez, a supporter of Armenia, is well known for making anti-Azerbaijani remarks that seek to sabotage the talks between Azerbaijan and Armenia on a possible peace treaty. While at the same time, this is not the first controversy involving the senator and his group. Also well known is the fact that he receives funding from the American Armenian lobby.
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