Liquid biopsy using circulating tumor DNA (ctDNA) is gaining momentum as a powerful non-invasive tool for multi-cancer early detection (MCED) and precision medicine. The current paper highlights the role of artificial intelligence (AI), encompassing machine learning and deep learning techniques, in refining the analytical process of ctDNA to facilitate early cancer detection, diagnosis, prediction of the tissue of origin, and individualized disease management. Clinical trials in humans for various cancers, such as lung, colorectal, pancreatic, breast, and ovarian cancer, illustrate the ability of AI-enhanced ctDNA technology to detect even minute molecular changes in terms of mutations, epigenetic patterns, fragmentation features, and chromosome anomalies with higher sensitivity and specificity. In addition, the review highlights the biological relevance of ctDNA, the clinical utility of AI-based MCED systems, and the benefits of non-invasive testing, continuous surveillance, and detection of multiple cancers through a single blood sample. However, significant drawbacks, including low ctDNA concentration in early-stage tumors, false positives and negatives, non-standardization, ethical issues, and expensive technology, are substantial impediments to clinical adoption. Nonetheless, AI-powered ctDNA diagnostics hold immense promise for revolutionizing cancer screening in the future.