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Plasma circulating tumor DNA (ctDNA) analysis has emerged as a minimally invasive means to perform molecular tumor typing. Here we developed a custom ultra-sensitive ctDNA next-generation sequencing assay using molecular barcoding technology and off-the-shelf reagents combined with bioinformatics tools for enhanced ctDNA analysis. Assay performance was assessed via a spike-in experiment and the technique was applied to analyze 41 plasma samples from men with advanced prostate cancer. Orthogonal validation was performed using a commercial assay. Sensitivity and specificity of 93 and 99.5% were recorded for ultra-rare somatic variants (<1%), with high concordance observed between the in-house and commercial assays. The optimized protocol dramatically improved the efficiency of the assay and enabled the detection of low-frequency somatic variants from plasma cell-free DNA (cfDNA).