The musician's difficulties were discussed by his pal Mark Gable, the frontman of fellow Australian band Choirboys who said it appeared the 61-year-old "is unable to perform any more".
Speculation about his health led to suggestions the band were on the brink of retirement, but US music publication Billboard has now reported that "there's no truth to the rumour".
Although there has been no official confirmation, Billboard reported on its website that insiders had dismissed the idea the band would call it a day.
The band has previously survived the death of its singer when Scottish-born frontman Bon Scott died in 1980 after a night of heavy drinking in London, to be replaced by Brian Johnson who has remained as vocalist ever since.
Gable said in an interview with ABC Radio: "Malcolm is sick. From what I understand, and it's even been confirmed in part by his son Ross, that it would appear Malcolm is unable to perform any more.
"It's not just that he is unwell, it's that it is quite serious. It will constitute that he definitely won't be able to perform live. He will probably not be able to record."
Young, who emigrated from Scotland to Australia at the age of 10 with his family, formed AC/DC in 1973 with his younger brother Angus, who has famously dressed as a schoolboy onstage for many years.
The band has been a huge draw on the rock circuit for decades, creating anthems such as Highway To Hell and Back In Black although they have tended to have album rather than single success. Their songs were used as the soundtrack for the movie Iron Man 2.
AC/DC's albums have been few and far between in recent years and their most recent release, 2008 chart-topper Black Ice, was only their third album since 1990.
Johnson said there were plans for the group to meet up in the near future but was unable to make any firm commitments about their future.
In an interview, he said: "I wouldn't like to say anything either way about the future. I'm not ruling anything out. One of the boys has a debilitating illness, but I don't want to say too much about it."
He said his bandmates were going to meet up next month in Canada. "We're going to pick up some guitars, have a plonk, and see if anybody has got any tunes or ideas. If anything happens, we'll record it," Johnson said.
And he appeared to suggest the group's farewell could be on the cards when he said a 40th anniversary tour would be "a wonderful way to say bye bye".
"We would love to do it. But it's all up in the air at the moment," he said of the shows.