The team confirmed the diagnosis Monday in a statement on its website. The Senators say he'll begin treatment immediately.
Assistant general managers Pierre Dorion and Randy Lee will manage the hockey operations department in his absence.
The 71-year-old Murray has been with the Senators since June 2004. He spent two full seasons as head coach before replacing the fired John Muckler as GM after guiding Ottawa to the Stanley Cup final in 2007.
He's also served as coach or general manager at Washington, Detroit, Florida and Anaheim.
Murray, who made a brief return to the bench in 2007-08, won the Jack Adams award as coach of the year in 1984 with the Capitals. He was general manager of the Florida team that advanced to the Stanley Cup final in 1996.