In an announcement from the White House, Clinton praised Bentsen for a "job, very, very well done."
The president said Bentsen had expressed a desire to return to his native Texas to spend more time with his family and grandchildren but would be available to serve in a "kitchen cabinet" to provide outside advice to the administration.
Bentsen's resignation was to take effect Dec. 22.
Rubin, who amassed a multimillion-dollar fortune on Wall Street before joining the administration, will have to win Senate approval for the cabinet job.
Bentsen called Rubin "an excellent choice" and said he had originally recommended Rubin for the treasury job when Clinton approached him in 1992.
"After a career in public service, I want to go back to Texas, to my roots and return to the private sector ... while I still have a spring in my step," Bentsen said.
Bentsen said he told Clinton in September he planned to leave after the midterm elections "and the completion of our agenda for the year."
He praised Rubin as "a man of honor and integrity" with "a broad knowledge of our problems and programs."
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