In an appearance on CBS' "Face the Nation," the senator said that while Egyptian President Mohamed Morsi was "a terrible president," the United States "should not be supporting this coup," which ousted Morsi from rule Wednesday.
McCain called for a suspension in the $1.3 billion aid the United States provides the Egyptian military each year.
"It was a coup, and it was the second time in two and a half years that we have seen the military step in," McCain said. "It's a strong indicator of the lack of American leadership and influence, since we've urged the military not to do that. And, reluctantly, I believe that we have to suspend aid until such time as there is a new constitution and a free and fair election."
The senator criticized the Obama administration for being "undecided" on its reaction to the coup.
"We don't claim it's going to be easy, but for us to continue to support coups is a lesson of history that we should have learned a long time ago. I think it would be a mistake, and, frankly, a contradiction," McCain said.
"Egypt is just one segment of a failure of American leadership over the last five years, and we need to start being leaders rather than bystanders," he added.
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