The 74-year-old football icon's family has revealed that Keegan "will undergo treatment" for the illness and are "requesting privacy".
A family statement read: "Kevin was recently admitted to hospital for further evaluation of ongoing abdominal symptoms.
"These investigations have revealed a diagnosis of cancer, for which Kevin will undergo treatment.
"Kevin is grateful to the medical team for their intervention and ongoing care.
"During this difficult time, the family are requesting privacy, and will be making no further comment."
Keegan enjoyed an illustrious playing career in which he represented Liverpool, Hamburg and Newcastle United and twice won the European Footballer of the Year award.
He also won 63 caps for England and scored 21 goals for his country.
Once his playing career ended, Keegan moved into management and challenged for the Premier League title in a celebrated five-year stint as Newcastle boss in the 1990s.
He also managed England from 1999 to 2000 but resigned from the role after the Three Lions were beaten 1-0 by Germany in the final match at the old Wembley Stadium.
Keegan also had spells in charge of Fulham and Manchester City before making an ill-fated return to Newcastle in 2008 - leaving after just eight months as a result of differences with the Magpies hierarchy.
Newcastle expressed support for "King Kev" on social media, stating: "We're with you every step of the way. Hoping for a full and speedy recovery."
The club's current manager Eddie Howe also sent his best wishes to Keegan.
He told Sky Sports before Newcastle's 4-3 win against Leeds on Wednesday (07.01.26): "Really sad news. Kevin is an absolute icon of this football club, not just as a player but as a manager. An inspirational figure.
"I've been lucky enough to meet him a few times. He's been so kind and generous with his time and his words for me. We wish him well, the whole city is behind him and with him every step of the way."
Liverpool added "the thoughts and support of everyone" of everyone at Anfield are with their former player.
The Premier League side said: "All of us at LFC and official former players association Forever Reds send our best wishes to Kevin, his family and friends."
