Circulating tumor DNA (ctDNA) is cell-free DNA (cfDNA) fragment in the bloodstream that originates from malignant tumors or circulating tumor cells. Recently, ctDNA has emerged as a promising non-invasive biomarker in clinical oncology. Analysis of ctDNA opens up new avenues for individualized cancer diagnosis and therapy in various types of tumors. Evidence suggests that minimum residual disease (MRD) is closely associated with disease recurrence, thus identifying specific genetic and molecular alterations as novel MRD detection targets using ctDNA has been a research focus. MRD is considered a promising prognostic marker to identify individuals at increased risk of recurrence and who may benefit from treatment. This review summarizes the current knowledge of ctDNA and MRD in solid tumors, focusing on the potential clinical applications and challenges. We describe the current state of ctDNA detection methods and the milestones of ctDNA development and discuss how ctDNA analysis may be an alternative for tissue biopsy. Additionally, we evaluate the clinical utility of ctDNA analysis in solid tumors, such as recurrence risk assessment, monitoring response, and resistance mechanism analysis. MRD detection aids in assessing treatment response, patient prognosis, and risk of recurrence. Moreover, this review highlights current advancements in utilizing ctDNA to monitor the MRD of solid tumors such as lung cancer, breast cancer, and colon cancer. Overall, the clinical application of ctDNA-based MRD detection can assist clinical decision-making and improve patient outcomes in malignant tumors.