Van Gaal is considered to be one of the better coaches in football as he has won league titles with the likes of Barcelona, Bayern Munich, Az Alkmaar and Ajax. He also tasted Champions League success with the Amsterdam outfit in 1995.
He is currently in his third spell as the coach of the Netherlands, having led them to a third-place finish at the 2014 World Cup.
The 70-year-old tactician made the announcement on the Dutch TV programme Humberto on Sunday while promoting a new documentary on his life. Van Gaal also revealed that he kept the news away from the Dutch players during the recent international break.
"I didn't want to tell it to my players because it could have influenced their performances. In each period during my time as manager of the national team I had to leave in the night to go to the hospital without the players finding it out until now. While thinking I was healthy, but.. I am not."
"I've been through a lot with illnesses, including with my own wife. So that's just part of life. [I] as a human being, have probably become richer because of all those experiences," said Van Gaal.
The Dutch tactician had a two-year spell at Manchester United where he led the Old Trafford outfit to FA Cup success before being replaced by Jose Mourinho.
Manchester United lead the way as tributes pour in for Louis van Gaal after his announcement
Soon after Van Gaal announced his battle with cancer, the Dutch tactician received support from all quarters.
Manchester United quickly put up a post on Twitter saying that the club is fully behind the manager in his battle against cancer.
"Everybody at Manchester United is fully behind our former manager, Louis van Gaal, in his battle against cancer. Sending you strength and courage, Louis."
Another of his former clubs, Barcelona, also announced their support for Van Gaal on social media.
"Our thoughts and prayers go out to former Barça manager Louis van Gaal, who has been diagnosed with prostate cancer. Stay strong, Louis, and get well soon."
It remains to be seen if the announcement will force the Dutch tactician to step down from his position as the national team manager.