The emerging field of liquid biopsy stands at the forefront of novel diagnostic strategies for cancer and other diseases. Liquid biopsy allows minimally invasive molecular characterization of cancers for diagnosis, patient stratification to therapy, and longitudinal monitoring. Liquid biopsy strategies include detection and monitoring of circulating tumor cells, cell-free DNA, and extracellular vesicles. In this review, we address the current understanding and the role of existing liquid-biopsy-based modalities in cancer diagnostics and monitoring. We specifically focus on the technical and clinical challenges associated with liquid biopsy and biomarker development being addressed by the Liquid Biopsy Consortium, established through the National Cancer Institute. The Liquid Biopsy Consortium has developed new methods/assays and validated existing methods/technologies to capture and characterize tumor-derived circulating cargo, as well as addressed existing challenges and provided recommendations for advancing biomarker assays.