Top assistant Kenny Atkinson will coach the Hawks.
Atkinson said, ''Our thoughts are with him, obviously, and his family. We're all pretty close.''
The team announced Budenholzer returned to Atlanta early Friday after initially traveling with the team. The Hawks gave no additional details and asked fans and media to ''respect the private nature of the situation.''
Budenholzer, who was last season's NBA coach of the year, is in his third season with Atlanta. He also took over as president of basketball operations after the departure of general manager Danny Ferry this season.
Budenholzer guided the Hawks to a franchise-record 60 wins and a spot in the Eastern Conference final last season.