Sen. Jon Tester, D-Mont., lost he re-election bid to Republican Tim Sheehy. (Sarah Silbiger/Getty Images)

Montana Sen. Jon Tester, a key voice for Democrats on veterans and military spending issues, lost his re-election bid on Tuesday to Republican challenger Tim Sheehy, an outcome that gave GOP leaders the majority in the Senate.

The Associated Press called the race in favor of Sheehy early Wednesday morning, with the Republican leading by nearly 8% in the vote.

Sheehy is a former Navy SEAL who also graduated from Army Ranger School as part of a special operations exchange program between the services. He courted controversy during his campaign for claiming to have been shot while serving in Afghanistan, despite no military records backing up the claim.

His victory will add another veteran to the list of prominent Republicans with military service in the Senate, including Arkansas' Tom Cotton and Florida's Rick Scott.

Tester's defeat represents a significant political setback for the Democratic Party, not just because of the loss of control of the Senate but also because of Tester's leadership on a host of national security and veterans issues.

He has served in the Senate since 2007 and been chairman of the Senate Veterans' Affairs Committee since 2017. Tester was a leading voice on the PACT Act -- legislation which provided disability benefits and expanded health care to millions of veterans with military toxic exposure injuries -- ahead of its passage in 2022.

Tester has served as the chairman of the Senate Appropriations Committee's defense panel for the last three years, helping guide annual funding decisions for the Department of Defense.