The now-deferred projects were planned for military installations in 23 states and around the world.
If Congress declines to fund the construction projects - or "backfill" them in the Trump administration's parlance - they will remain in limbo and effectively be defunded.
Lieutenant General Andrew Poppas, director of operations at the Joint Staff, said he expected that building the wall would reduce the number of troops needed on the border. She said the Fort Huachuca project was already delayed.
Republican U.S. Senator Martha McSally of Arizona "fought to ensure" no projects in her state would be affected and was guaranteed of that by former acting Defense Secretary Patrick Shanahan, she said in a statement.
The Pentagon's decision to approve the wall funds, and to pull that money from existing military projects sparked the ire of the opposition Democrats. In March, the Pentagon sent to Congress a broad list of projects that could be affected. The wall, among other immigration issues, has also been a flashpoint between Trump and California.
The move puts lawmakers who blocked Trump's wall funding in a hard position, as they must now decide if they will refund the projects that are being used to channel money to the wall.
Democrats and other critics were outraged, pointing to the other part of the president's campaign promise that Mexico would pay for the wall's construction.
Esper's notifications come almost seven months after Trump declared a national emergency on February 15 in order to obtain roughly $8 billion to build his long-promised wall, which he has claimed will prevent irregular immigration along the southern border.
"To pay for his xenophobic border wall boondoggle, President Trump is about to weaken our national security by stealing billions of dollars from our military", Wasserman Schultz said. Contracts to build the impacted projects have not yet been awarded and construction on them was not planned to start in fiscal year 2020, which begins October 1, she said.
The Pentagon will obtain the US$3.6 billion by taking money away from 127 military construction projects that Congress already funded in recent years.
The shuffling of funds triggered backlash from activist groups and congressional leaders who argue the measure encroaches on Congress' power to oversee spending.
She added that the House of Representatives "will continue to fight this unacceptable and deeply risky decision in the courts, in the Congress and in the court of public opinion and honour our oath to protect the Constitution".
Reed said the diversion of funds should be legally challenged and struck down in the courts.
Defense Secretary Mark Esper signed off on the plans and notified congressional leaders of the change on Tuesday.
"The fact that the government sat on these so-called "emergency funds" for seven months further confirms that this is nothing but an unlawful power grab", ACLU attorney Dror Ladin said.