Labor's Prue Car said the cancer was discovered during a recent screening and that, because it was caught early, her doctors are optimistic about her prognosis.
"I've faced this challenge before, and I'm determined to beat it again," the MP for Londonderry said in a statement on Tuesday.
"Testing has confirmed this is unrelated to my previous diagnosis."
In 2022, the mother of one, who entered state parliament in 2015, took leave after being diagnosed with kidney cancer.
Ms Car has been deputy premier of NSW since Labor won government in March 2023.
Her portfolios of Minister for Education and Early Learning and Minister for Western Sydney will be taken over by fellow minister Courtney Houssos while she undergoes treatment.
"Breast cancer screenings are vital for early detection and treatment, and I strongly encourage all women to stay up to date with their checks," Ms Car said.
Premier Chris Minns said Ms Car was a fighter and would face her health challenge with determination and grace.
"I fully support her decision to take the time she needs to focus on her health and recovery, and I know she will be supported by expert care and the love of her family, friends, and colleagues," he said in a statement.
"I also echo her important message about early detection and encourage everyone to stay on top of their health checks."
Ms Car was a Penrith City councillor and national communications manager at MS Australia before she entered parliament.
She was also an advisor to former NSW Labor premier Bob Carr from 2003 to 2005 and a party campaign co-ordinator from 2005 to 2007.
Ms Car, who's in her early 40s, is not the first woman MP to hold office while facing breast cancer.
Federal Victorian MP Peta Murphy battled a recurrence of breast cancer after she entered parliament in 2019. She died in 2023 aged 50.Â
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