Rugova, 61, looking weak and frail, told the nation in a televised address on Monday that he would continue to work towards his lifelong goal of Kosovo's independence from Serbia.
"We will continue to work even harder for the recognition of Kosovo's independence," Rugova said.
"Doctors have found that I suffer from a localised lung cancer and they have assigned me an intensive healing therapy," he said.
"I am convinced that with the help of God I will overcome this battle."
Sitting in an armchair at his official residence, a pale Rugova thanked the US government for taking care of him.
Rugova returned to Kosovo on Saturday after spending a week at the US military Landstuhl Regional Medical Centre in Germany, where he received medical treatment after a sudden deterioration in his health.
Secrecy had surrounded the president's health problems for the last two weeks as he underwent tests and treatment. His associates offered no details on his illness.
That led to fears of a possible slowdown in the process leading to talks on the province's future, planned for later this year.
Kosovo is a UN protectorate but
still a part of Yugoslavia
The president, who has cult status among some ethnic Albanians, has been at the forefront of their demand for independence from Serbia since the early 1990s, when he led a non-violent movement against the policies of Slobodan Milosevic, then president of Yugoslavia.
Serbs want Kosovo to remain part of Serbia-Montenegro, a union that replaced Yugoslavia.
If Rugova left office due to ill health, it would leave Kosovo's political scene in disarray at the most sensitive time since the end of the war in 1999.
Talks to determine Kosovo's future are to take place if the province reaches internationally set standards on human rights, rights of minorities and rule of law.
Until recently, Rugova led the Democratic League of Kosovo, the province's biggest political party, which has won two general elections since the UN began administering the disputed province in 1999.
The UN came in after a Nato air war aimed at stopping the crackdown by Serb forces on independence-seeking ethnic Albanians.