The use of circulating tumor DNA (ctDNA) as a prognostic and/or predictive biomarker has been proven in numerous studies. Recent technical advancements have improved sensitivity, specificity, and feasibility of ctDNA detection enabling innovative clinical applications. Besides its potential use as a diagnostic biomarker and the detection of recurrence or minimal residual disease, the most widespread application of the so-called liquid biopsy is real-time monitoring of treatment response and tumor evolution. Since tissue biopsies provide just a static snapshot of the tumor at the time of biopsy and do not necessarily represent the entire tumor genome, a sequential analysis of ctDNA enables an early identification of resistance mechanisms before they become clinically obvious. Furthermore, novel therapy targets that have not been present in available tumor samples might be identified. However, for an actual implementation of the liquid biopsy in clinical practice, it is essential to develop standardized pre-analytical and analytical methodologies and to resolve some outstanding question with respect to origin, biology, and dynamics of ctDNA. In this short review, the clinical utility and existing limitations of ctDNA focusing on monitoring treatment response will be discussed.