Manager Dusty Baker and general manager Wayne Krivsky said the club discussed the plans with Stanton on Friday as they worked on final roster moves before Monday's opener.
The left-hander, due $3 million this year, will be designated for assignment. If he refuses to go to the minor leagues, the Reds would have 10 days to trade or release him. They would owe him this year's salary and $500,000 of the team's 2009 option.
"We don't have to do those things until Monday, but we have had a conversation with him to explain the situation," Krivsky said.
"Stanton was a very tough decision," Baker said.
Stanton is coming off a disappointing 2007 season, going 1-3 with a 5.93 ERA in 69 games.
After 19 major league seasons, Stanton ranks second in appearances with 1,178. He pitched in six World Series with the Braves and Yankees and was signed by the Reds after ending the 2006 season as the Giants' closer.
He was beat out this year by another 40-year-old lefty, Kent Mercker, who came to camp under a minor league contract after missing last season following elbow surgery. The 17-year veteran pitched four seasons for the Reds and also pitched for Baker's Chicago Cubs.
Cincinnati also optioned left-handed relief pitcher Bill Bray to Triple-A Louisville, assigned infielder Andy Phillips to minor league camp and returned left-handed pitcher Jose Capellan to the Red Sox.
Matt Belisle, expected to contend for the starting rotation, is trying to work back from a stiff right forearm. The Reds haven't made a formal move with Belisle, but could option him to Louisville or put him on the 15-day disabled list.