Reports emerged overnight claiming that the 64-year-old has been in and out of hospital since being diagnosed.
A statement from his former club said: "We can sadly confirm Pat Rice is in hospital receiving treatment for cancer. Everyone at Arsenal Football Club sends him our best wishes. Our thoughts are with Pat and his family."
Rice spent 14 years playing for the Gunners before returning to the club in 1984 to take on a role as youth coach.
He had a stint as caretaker boss in 1996 before becoming assistant manager to Arsene Wenger until his retirement in May last year.
Rice was awarded an MBE for his services to football in the 2013 New Year's Honours list.