Genetic and epigenetic alterations significantly contribute to development of human cancer. Genotyping tumour tissue in search for these actionable genetic and epigenetic changes has become routine practice in oncology. However, sampling tumour tissue has significant inherent limitations. It provides only a single snapshot in time, prone to selection bias due to intra-tumour heterogeneity, and cannot always be performed owing to its invasive nature. Circulating tumour DNA (ctDNA) based liquid biopsy provides an effective alternative to invasive tissue sampling and have emerged as a minimally invasive, real-time biomarker. Recent advancements in DNA sequencing technologies have revealed enormous potential of ctDNA to improve tumour detection and stratification. In this review, we critically appraise the role of ctDNA as a liquid biopsy for cancer and evaluate the role of circulating tumour DNA as a diagnostic, prognostic and predictive biomarker. We also highlight some technical challenges and constraints associated with circulating DNA analysis.