The Sirio-Libanes Hospital in Sao Paulo announced on Saturday that the former shoeshine boy had been diagnosed with a malignant tumour in his larynx.
Medical staff said the tumour is "not too big" and described the chances of Lula overcoming the disease as "excellent".
But the announcement has already led political analysts to downgrade the likelihood of Lula – who left office at the end of 2010 with record popularity ratings – standing for election again.
Francisco Teixeira, a political scientist at the Federal University of Rio de Janeiro, said Lula's illness will "alter the whole Brazilian political scene from here on" and lessen the chances of him returning to power.
Dilma Rousseff, his protégé and successor, may now find it easier to stamp her own character on government and a cabinet shake-up expected early in 2012 could see several ministers appointed by Lula replaced.
- 29 Oct 2011
"With Lula removed from the background, the ministerial reform will tend to be deeper," Teixeira told BBC Brazil.
In December last year, days before Ms Rousseff's inauguration, Lula said in an interview that he could not rule out running for president again because he is "a born politician".
He has since continued to play a unifying role in his Workers' Party and maintained a high-profile by travelling to business events and regional summits.
Ms Rousseff is viewed as having made a solid start as president and a recent poll gave her an approval rating of 71 per cent.
But a series of corruption scandals have already seen five ministers leave her government, weakening her coalition and fuelling speculation that Lula could run again in 2014.
Lula, who quit smoking in 2010 after nearly 50 years, will attend hospital today to begin what is expected to be the first of three courses of chemotherapy and radiotherapy as an outpatient.
Orignal From: Lula da Silva to begin chemotherapy on Monday