The former Foreign Secretary is all set to succeed M K Narayanan, who has already been named the governor of West Bengal.
The career diplomat, who is the second former foreign secretary to be appointed as NSA, will be in the rank of Minister of State.
60-year-old Menon played a crucial role in the singing of the significant Indo US civil nuclear cooperation agreement.
Before holding the post of Foreign Secretary, Menon worked as the High Commissioner to Sri Lanka and Pakistan. He was also India's Ambassador to China and Israel.