5-Methylcytosine (5mC) is considered as a common epigenetic modification that plays an important role in the regulation of gene expression. At the same time, 5-hydroxymethylcytosine (5hmC) has been found as an emerging modification of cytosine bases of recent years. Unlike 5mC, global 5hmC levels vary from tissues that have differential distribution both in mammalian tissues and in the genome. DNA hydroxymethylation is the process that 5mC oxidates into 5hmC with the catalysis of TET (ten-eleven translocation) enzymes. It is an essential option of DNA demethylation, which modulates gene expression by adjusting the DNA methylation level. Various factors can regulate the demethylation of DNA, such as environmental toxins and mental stress. In this review, we summarize the progress in the formation of 5hmC, and obtaining 5hmC in a cell-free DNA sample presents multiple advantages and challenges for the subject. Furthermore, the clinical potential for 5hmC modification in dealing with cancer early diagnosis, prognostic evaluation, and prediction of therapeutic effect is also mentioned.