The Grease star has postponed upcoming tour dates after discovering that severe back pain she has been suffering is a result of the disease spreading to her spine.
The 68-year-old was due to perform across the US and Canada next month.
She will have treatment and expects to return to the stage later in 2017.
Last week, the four-time Grammy award winner cancelled planned meet-and-greet events for the upcoming tour dates due to "severe back pain".
A statement on Tuesday said: "The back pain that initially caused her to postpone the first half of her concert tour, has turned out to be breast cancer that has metastasized to the sacrum.
"In addition to natural wellness therapies, Olivia will complete a short course of photon radiation therapy and is confident she will be back later in the year, better than ever, to celebrate her shows."
After surviving her initial cancer diagnosis in 1992, Newton-John became a prominent campaigner for others facing the disease, as well as on other health issues.
She set up the Olivia Newton-John Cancer and Wellness research centre in Melbourne, Australia. It was partially funded by a sponsored walk along the Great Wall of China, aided by celebrity friends including Sir Cliff Richard and Joan Rivers.
Tuesday's statement advised ticket holders for her upcoming concerts to contact the venue about refunds.
Singer and actress Olivia Newton-John has revealed she has breast cancer again, 25 years after recovering from her original diagnosis.