Liquid biopsy based on cell-free DNA (cfDNA) enables non-invasive dynamic assessment of disease status in patients with cancer, both in the early and advanced settings. The analysis of DNA-methylation (DNAm) from cfDNA samples holds great promise due to the intrinsic characteristics of DNAm being more prevalent, pervasive, and cell- and tumor-type specific than genomics, for which established cfDNA assays already exist. Herein, we report on recent advances on experimental strategies for the analysis of DNAm in cfDNA samples. We describe the main steps of DNAm-based analysis workflows, including pre-analytics of cfDNA samples, DNA treatment, assays for DNAm evaluation, and methods for data analysis. We report on protocols, biomolecular techniques, and computational strategies enabling DNAm evaluation in the context of cfDNA analysis, along with practical considerations on input sample requirements and costs. We provide an overview on existing studies exploiting cell-free DNAm biomarkers for the detection and monitoring of cancer in early and advanced settings, for the evaluation of drug resistance, and for the identification of the cell-of-origin of tumors. Finally, we report on DNAm-based tests approved for clinical use and summarize their performance in the context of liquid biopsy.