Analysis of circulating nucleic acids in bodily fluids, referred to as “liquid biopsies”, is rapidly gaining prominence. Studies have shown that cell-free DNA (cfDNA) has great potential in characterizing tumor status and heterogeneity, as well as the response to therapy and tumor recurrence. DNA methylation is an epigenetic modification that plays an important role in a broad range of biological processes and diseases. It is well known that aberrant DNA methylation is generalizable across various samples and occurs early during the pathogenesis of cancer. Methylation patterns of cfDNA are also consistent with their originated cells or tissues. Systemic analysis of cfDNA methylation profiles has emerged as a promising approach for cancer detection and origin determination. In this review, we will summarize the technologies for DNA methylation analysis and discuss their feasibility for liquid biopsy applications. We will also provide a brief overview of the bioinformatic approaches for analysis of DNA methylation sequencing data. Overall, this review provides informative guidance for the selection of experimental and computational methods in cfDNA methylation-based studies.