The 58-year-old, who was treated for prostrate cancer in 2005, coached the West's All-Star team Sunday and has led the Nuggets to the second best record in the Western Conference.
"The support I've received from my family, the Nuggets organization and my friends in the basketball community already has been incredible," Karl told reporters.
The Nuggets said they had known of Karl's condition for weeks and would support the veteran coach during his time away for treatment.
Karl agreed to a contract extension with the team last week that will keep him in Denver through the 2010-2011 campaign.
(Reporting by Gene Cherry in Salvo, North Carolina; Editing by Peter Rutherford)