Aberrant DNA methylation patterns, which induced by folate deficiency, play important roles in tumorigenesis of colorectal cancer (CRC). Some DNA methylation alterations can also be detected in cell-free DNA (cfDNA) of patients’ plasma, making cfDNA an ideal noninvasive circulating biomarker. However, exact DNA methylation alterations induced by folate deficiency in tumorigenesis of CRC and exact potential circulating cfDNA methylation biomarker are still unclear. Therefore, DNA methylation patterns of the normal human colon mucosal epithelial cell line (NCM460), cultured with normal or low folate content, were screened and the DNA hypomethylation of cystathionine-beta-synthase (CBS) promoter was further validated in vitro and vivo. Then, the correlation analysis between folate level, DNA methylation alteration in promoter and expression of CBS was carried out in vitro and vivo. Further, the methylation patterns of CBS promoter in plasma cfDNA were detected and statistically correlated with pathological parameters and clinical outcome. Our study showed that DNA hypomethylation in CBS promoter, induced by folate deficiency, would lead to up-regulation of CBS both in vitro and vivo. Patients with cfDNA hypomethylation of CBS promoter in plasma were correlated with high tumor stage and poor clinical outcome. In addition, cfDNA hypomethylation of CBS promoter in plasma was shown to be an independent prognostic factor for recurrence and cancer-related death in CRC. Our results indicated that DNA hypomethylation of CBS promoter induced by folate deficiency could serve as a potential noninvasive circulating biomarker and may be helpful in developing more effective prognostic markers for CRC.