In a letter to Federal Reserve Chairman Jerome Powell, Mnuchin said that he is asking the central bank to not renew its lending facilities that used CARES Act funding and to return the unused funds to the Treasury.
The programs -- that were set to expire at the end of the year -- include the Fed's corporate credit facilities, municipal lending facility and the Main Street Lending program for small and mid-size businesses.
Mnuchin wrote that these Fed programs supported by the Treasury have "clearly achieved their objective," adding that markets have responded positively and banks have been able to continue lending.
He added that if the Fed reserved unused funds to the Treasury, Congress can reappropriate $455 billion.
Mnuchin's letter comes as the economy is still entrenched in uncertainty surrounding the coronavirus-induced recession, and as new virus cases surge throughout the country.
The Fed issued a rare public rebuke in a statement, saying that it "would prefer that the full suite of emergency facilities established during the coronavirus pandemic continue to serve their important role as a backstop for our still-strained and vulnerable economy."
Mnuchin's move also comes amid a transition to a new administration under President-elect Joe Biden, and could dampen the Fed's power during this time.
In an interview with CNBC Friday morning, Mnuchin defended his actions, saying that it was "not a political issue."
Mnuchin's decision received support from Sen. Pat Toomey, R-Pa., a member of the Senate Finance Committee, who said in a statement, "Congress's intent was clear: these facilities were to be temporary, to provide liquidity, and to cease operations by the end of 2020."
Senate Finance Committee Ranking Member Ron Wyden, D-Ore., however, called the move "sabotage."
"Steve Mnuchin is removing critical support from a weak economy against the Federal Reserve’s wishes," Wyden tweeted. "This is economic sabotage."
ABC News' Elizabeth Schulze contributed to this report.