Background The standard of care treatment for muscle-invasive bladder cancer (MIBC) is radical cystectomy, which is typically preceded by neoadjuvant chemotherapy. However, the inability to assess minimal residual disease (MRD) noninvasively limits our ability to offer bladder-sparing treatment. Here, we sought to develop a liquid biopsy solution via urine tumor DNA (utDNA) analysis. Methods and findings We applied urine Cancer Personalized Profiling by Deep Sequencing (uCAPP-Seq), a targeted next-generation sequencing (NGS) method for detecting utDNA, to urine cell-free DNA (cfDNA) samples acquired between April 2019 and November 2020 on the day of curative-intent radical cystectomy from 42 patients with localized bladder cancer. The average age of patients was 69 years (range: 50 to 86), of whom 76% (32/42) were male, 64% (27/42) were smokers, and 76% (32/42) had a confirmed diagnosis of MIBC. Among MIBC patients, 59% (19/32) received neoadjuvant chemotherapy. utDNA variant calling was performed noninvasively without prior sequencing of tumor tissue. The overall utDNA level for each patient was represented by the non-silent mutation with the highest variant allele fraction after removing germline variants. Urine was similarly analyzed from 15 healthy adults. utDNA analysis revealed a median utDNA level of 0% in healthy adults and 2.4% in bladder cancer patients. When patients were classified as those who had residual disease detected in their surgical sample (n = 16) compared to those who achieved a pathologic complete response (pCR; n = 26), median utDNA levels were 4.3% vs. 0%, respectively (p = 0.002). Using an optimal utDNA threshold to define MRD detection, positive utDNA MRD detection was highly correlated with the absence of pCR (p < 0.001) with a sensitivity of 81% and specificity of 81%. Leave-one-out cross-validation applied to the prediction of pathologic response based on utDNA MRD detection in our cohort yielded a highly significant accuracy of 81% (p = 0.007). Moreover, utDNA MRD–positive patients exhibited significantly worse progression-free survival (PFS; HR = 7.4; 95% CI: 1.4–38.9; p = 0.02) compared to utDNA MRD–negative patients. Concordance between urine- and tumor-derived mutations, determined in 5 MIBC patients, was 85%. Tumor mutational burden (TMB) in utDNA MRD–positive patients was inferred from the number of non-silent mutations detected in urine cfDNA by applying a linear relationship derived from The Cancer Genome Atlas (TCGA) whole exome sequencing of 409 MIBC tumors. We suggest that about 58% of these patients with high inferred TMB might have been candidates for treatment with early immune checkpoint blockade. Study limitations included an analysis restricted only to single-nucleotide variants (SNVs), survival differences diminished by surgery, and a low number of DNA damage response (DRR) mutations detected after neoadjuvant chemotherapy at the MRD time point. Conclusions utDNA MRD detection prior to curative-intent radical cystectomy for bladder cancer correlated significantly with pathologic response, which may help select patients for bladder-sparing treatment. utDNA MRD detection also correlated significantly with PFS. Furthermore, utDNA can be used to noninvasively infer TMB, which could facilitate personalized immunotherapy for bladder cancer in the future.