There are several different mechanisms responsible for the release of cfDNA in blood plasma, and henceforth it can provide information regarding dynamic changes in the human body. Due to the fragmented nature, low concentration of cfDNA, and high background noise, there are several challenges in its analysis for regular use in diagnosis of cancer. Such challenges in the analysis of the methylation profile of cfDNA are further aggravated due to heterogeneity, biomarker sensitivity, platform biases, and batch effects. This review delineates the origin of cfDNA methylation, its profiling, and associated computational problems in analysis for diagnosis.