The 75-year-old confirmed the diagnosis on Tuesday having mistakenly posted about his treatment earlier in the day.
Speaking on social media, Dalglish spoke to fans and thanked those taking care of him and keeping the news quiet up until now.
"I am currently undergoing treatment for cancer. Unlike my mobile phone use, the treatment is going well.
"Ideally, this would have remained private because that's the way it should be, but my useless technology skills have forced my hand.
"Obviously I did not mean to make this matter public so I would appreciate it if the privacy of my family and myself are respected.
"As ever, thank you to the wonderful medical staff who have shown incredible care and discretion, not just for me but for many, many others. They are a credit to themselves."
In a statement, Liverpool also sent a message to the club legend who is loved by every club he featured for: "The support, best wishes and love of everyone at Liverpool FC are, and will be, with Sir Kenny and his family.
"The club would also like to underscore his request for privacy moving forward."
This shocking news comes just one day after fellow football legend Kevin Keegan revealed his stage four cancer diagnosis. Keegan stated he would like to return to St James’ Park to say goodbye. He said: “I want to say goodbye. I didn’t get the chance when I left the club last time.”