Douglas said he underwent his first round of chemotherapy and radiation treatment last week, noting, "It's about an eight-week struggle."
Douglas said he learned he had cancer about three weeks ago, joking that it was about the time he was booked to appear on Letterman's show. He said he went through "a litany of doctors and tests" without success before the cancer was diagnosed after he and his family returned from a vacation in Europe.
Stage 4 cancer "is intense" but hasn't spread below the neck, the actor said.
"The big thing you're always worried about is it spreading. ... I am above the neck, so nothing's gone down, and the expectations are good," Douglas said, explaining he was told there was an 80 percent recovery rate.
Letterman commented on Douglas looking and sounding good, to which Douglas quipped, "It's because I'm on stage."
Asked if doctors believe they caught it early enough, Douglas said, "I sure as (expletive) hope so."
Douglas's wife, actress Catherine Zeta-Jones, told People magazine she has difficulty watching the toll the treatment is taking on her husband.
"The hardest part is seeing his fatigue, because Michael is never tired," Zeta-Jones said.
She said Douglas broke the news to their children, Dylan, 10, and Carys, 7.