The 68-year-old represented the English Premier League side in 500 matches as a player and 413 as a manager, more than anyone else in the club’s history.
The former defender, who won 11 caps for Scotland and managed his country between 2008-09, helped Town win both the 1978 FA Cup and 1981 UEFA Cup under Sir Bobby Robson.
As manager, Burley guided Ipswich back into the top flight with victory in the 2000 Championship play-off final at Wembley and his side went on to finish fifth in the Premier League, qualifying for Europe.
He was in the dugout at Tynecastle for eleven league games in 2005, winning ten and drawing one, before being dismissed by then owner Vladimir Romanov, and also had short spells at Motherwell, Ayr United and Falkirk as a player.
In a statement released by Ipswich, Burley said: “After feeling unwell earlier this year, I have recently received a diagnosis and I am taking positive action to fight the disease.
“It has been a difficult time, but I am feeling much brighter now.
“In fact, I am able to get to matches at Portman Road and I am enjoying watching the team playing back in the Premier League.”
Burley added: “We are grateful to the club for the support they have shown me and my family and I would ask that everyone is respectful of our privacy at this time.”
Current Ipswich boss Kieran McKenna, whose own side won promotion back to the top flight last season to end a 22-year absence, added his support to former Derby, Crystal Palace and Southampton boss Burley.
George is without a doubt one of the greatest managers this club has ever had, according to McKenna.
“Since coming to Ipswich, getting to know George has been a pleasure.
He has a cheerful and upbeat disposition, and I have no doubt that he will carry that trait into the conflict he is currently facing. All of us are right behind him.
“Our thoughts and prayers are with George, his wife Jill, and their family,” said Mark Ashton, chairman of Ipswich.
“Seeing him here in the directors’ box on a matchday is always a pleasure, and we will do everything in our power to help one of our all-time greats, who holds a unique position as manager and player.”