The clonal evolution of acute myeloid leukemia (AML), an oligoclonal hematological malignancy, is driven by a plethora of cytogenetic abnormalities, gene mutations, abnormal epigenetic patterns, and aberrant gene expressions. These alterations in the leukemic blasts promote clinically diverse manifestations with common characteristics of high relapse and drug resistance. Defining and real-time monitoring of a personalized panel of these predictive genetic biomarkers is rapidly being adapted in clinical setting for diagnostic, prognostic, and therapeutic decision-making in AML. A major challenge remains the frequency of invasive biopsy procedures that can be routinely performed for monitoring of AML disease progression. Moreover, a single-site biopsy is not representative of the tumor heterogeneity as it is spatially and temporally constrained and necessitates the understanding of longitudinal and spatial subclonal dynamics in AML. Hematopoietic cells are a major contributor to plasma cell-free DNA, which also contain leukemia-specific aberrations as the circulating tumor-derived DNA (ctDNA) fraction. Plasma cell-free DNA analysis holds immense potential as a minimally invasive tool for genomic profiling at diagnosis as well as clonal evolution during AML disease progression. With the technological advances and increasing sensitivity for detection of ctDNA, both genetic and epigenetic aberrations can be qualitatively and quantitatively evaluated. However, challenges remain in validating the utility of liquid biopsy tools in clinics, and universal recommendations are still awaited towards reliable diagnostics and prognostics. Here, we provide an overview on the scope of ctDNA analyses for prognosis, assessment of response to treatment and measurable residual disease, prediction of disease relapse, development of acquired resistance and beyond in AML.