75-year-old Koirala had been admitted to Memorial Sloan Kettering Cancer Centre in New York, after the doctors involved in his treatment found black spots in his lungs a couple of weeks ago.
Koirala, a heavy smoker, had been diagnosed with tongue cancer seven years ago and was cured.
"The spot seen in one of his lungs has turned out to be first stage of lung cancer," a prime ministerial aide said quoting his personal physician, Dr Karbir Nath Yogi, who is with him in New York.
The doctors have said that they will administer the radiotherapy from today and it will be effective for the treatment as surgery.
"We expect him to leave New York after undergoing 10-12 days treatment," the doctor said.
Initial stage lung cancer can be curable and the treatment can be continued even after returning home, said the doctor.
Koirala became Prime Minister in February after the Nepali Congress emerged as the single largest party during the second Constituent Assembly elections.
"Seven years ago also, Koirala was diagnosed with preliminary-stage of tongue cancer and it was stopped from spreading further. The lung cancer detected this time is also at a similar stage," Yogi said over phone.
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