Hepatocellular carcinoma (HCC) constitutes a pressing global health issue, where conventional diagnostics like alpha-fetoprotein (AFP) and ultrasonography reveal limitations in early identification and prognostic reliability. Circulating tumor DNA (ctDNA) methylation has recently gained attention as an innovative "liquid biopsy" biomarker, offering epigenetic signatures and early disease signals through non-invasive detection. This review elucidates the mechanistic role of DNA methylation in HCC, highlighting its regulation of pivotal oncogenic cascades and its progression-dependent alterations. In addition, advanced detection techniques, such as restriction enzyme-based, enrichment-based, and bisulfite conversion-based approaches, were assessed in HCC. Moreover, the clinical applicability of ctDNA methylation in HCC was evaluated for early detection, prognostic assessment, and therapeutic surveillance. This review thoroughly outlines the current obstacles hindering the successful clinical translation of ongoing research. Furthermore, it outlines potential research directions to address these limitations and facilitate the rapid translation of findings into clinical practice. Ultimately, ctDNA methylation provides a significant advancement in deciphering the epigenetic profile of HCC, with potential benefits for precision oncology and patient outcomes.