Ablett lost his 16-month battle against non-Hodgkin's lymphoma and Hansen said the news had left him and several other members of the 1980s squad "distraught".
"He was a lovely guy and he was quite unassuming and everyone loved him," said the ex-Scotland international.
"It is such a shock even though we knew he was ill. I texted him on December 7 to go and see him and have a cup of tea and he texted back to say he had a doctor's appointment but wished me a merry Christmas and said he would see me in the new year.
"Then we get the news this morning and we are absolutely stunned and cannot believe this has happened.
"Talking to two or three ex-Liverpool players we are all distraught because we all thought he was fine and recovering.
"[To die at] 46 years of age is absolutely tragic. Each and every one of us is stunned by the news."
Hansen, who played in the same side in which Ablett won two Division One titles and an FA Cup in 147 appearances, felt the defender - who was comfortable in both the centre and on the left - would have had an even better career had he not been at Anfield at a time when they were arguably the best team in the world.
"He came into the dressing room when Liverpool had one of the great teams and he was right in there because he was a top-class player as well," he told Radio 5 Live.
"If he had joined Liverpool in the late 70s or early 80s he would have been a permanent fixture.
"He was a dedicated, consummate professional but he was right at the top of the tree.
"I had a couple of great centre-back partnerships at Liverpool and he was as good as anything.
"I played with him when he was on the left-side of defence and he made it really easy for me and as soon as he stepped into the Liverpool side I knew he was top-class player."
Ablett was at Anfield between 1983 and 1992, having progressed from being a Reds apprentice, before making the short move across Stanley Park to Everton.
He made 156 appearances for the Toffees, becoming the only player to win the FA Cup with both Merseyside teams when they beat Manchester United in 1995.
Ablett went on to play for Birmingham, Wycombe, Blackpool and American club Long Island Rough Riders before moving into coaching.
He began in Everton's youth set-up before becoming Liverpool Reserves manager and winning the Premier Reserve League North and the national title in 2008.
Ablett left a year later and was appointed Stockport manager but left after one season - during which they were in administration - and took up a coaching position at Ipswich in the summer of 2010 only to fall ill shortly afterwards.
Late last year he spoke of the shock at being diagnosed with the disease.
"Jacqueline (his wife) took one look at me and took me straight to the doctors," he said in an interview with Everton's website to support Blue September - a campaign to raise awareness of forms of cancer specifically affecting men.
"The following day they whisked me to Ipswich hospital and the sister asked us if we knew why we were there
"We said 'for tests' but she told us they had found a really aggressive lymphoma and that without immediate treatment I'd be in serious trouble.
"From diagnosis to that first session of chemotherapy was less than three days, so it was a massive shock."
Liverpool manager Kenny Dalglish, who gave Ablett his debut against Charlton in December 1986 in his first spell as Reds boss, paid tribute to the local-born defender.
"I gave Gary his debut and remember him scoring on his first start at Anfield against Nottingham Forest," he told liverpoolfc.tv.
"He was a really good servant to the football club not only as a player, but also as reserve team coach.
"He served the club proudly and credibly. It's very sad for everybody.
"The most important thing just now is to pay our respects to Gary, his wife Jacqueline, the two boys and his wee girl."
Everton manager David Moyes added his tribute, telling evertonfc.com: "It is so, so sad about Gary.
"He was a regular visitor to Finch Farm (training ground) over the last six months and he was a lovely man, well liked by everyone.
"My thoughts are with all his family at this terrible time."