Citing sources and an internal memorandum, the Los Angeles Times suggested the $41.9m had been destined for Guatemala and Honduras.
The countries are at the center of a migration crisis in which thousands of people have fled poverty, violence and corruption and attempted to cross the southern US border.
The money will instead be used for salaries, airfare, propaganda, technical assistance for elections and “good governance” training for Venezuelan opposition leader Juan Guaido and his faction, the memo reportedly said.
Spokespeople for the State Department, Mr Guaido and Venezuela’s Information Ministry did not immediately respond to a request for comment.
Mr Guaido invoked the Venezuelan constitution in January to assume an interim presidency, arguing the South American country’s President Nicolas Maduro was illegitimate.
Four months later, he led a failed attempt to spark a military rebellion against Mr Maduro, who said it was part of a US-orchestrated coup.
The president has called Mr Guaido a US-backed puppet and has so far retained his grip on the levers of government.
Close allies of Mr Guaido have subsequently been arrested. While his parliamentary immunity has been lifted, he has so far not been jailed
Under Mr Maduro’s leadership, the economy has collapsed and shortages of food and medicines have become widespread.
Fuel has also become scarce in parts of the oil-rich country and and some drivers have queued for days at petrol stations. There have also been frequent blackouts.
Mr Maduro’s government has blamed US sanctions for the shortages, while the opposition had argued that they are the result of mismanagement and corruption by consecutive socialist governments.
In April, United Nations agencies said more than 4 million Venezuelans had fled the country, adding that the pace of people fleeing had ”skyrocketed” since the end of 2015.
The State Department announced in June it was slashing hundreds of millions of dollars of aid to El Salvador, Guatemala and Honduras, after Mr Trump said the three countries were not doing enough to stem migration.
Agencies contributed to this report