Endogenous DNA is primarily found intracellularly in nuclei and mitochondria. However, extracellular, cell-free (cf) DNA, has been observed in several pathological conditions, including autoimmune diseases, prompting the interest of developing cfDNA as a potential biomarker. There is an upsurge in studies considering cfDNA to stratify patients, monitor the treatment response and predict disease progression, thus evaluating the prognostic potential of cfDNA for autoimmune diseases. Since the discovery of elevated cfDNA levels in lupus patients in the 1960s, cfDNA research in autoimmune diseases has mainly focused on the overall quantification of cfDNA and the association with disease activity. However, with recent technological advancements, including genomic and methylomic sequencing, qualitative changes in cfDNA are being explored in autoimmune diseases, similar to the ones used in molecular profiling of cfDNA in cancer patients. Further, the intracellular origin, e.g., if derived from mitochondrial or nuclear source, as well as the complexing with carrier molecules, including LL-37 and HMGB1, has emerged as important factors to consider when analyzing the quality and inflammatory potential of cfDNA. The clinical relevance of cfDNA in autoimmune rheumatic diseases is strengthened by mechanistic insights into the biological processes that result in an enhanced release of DNA into the circulation during autoimmune and inflammatory conditions. Prior work have established an important role of accelerated apoptosis and impaired clearance in leakage of nucleic acids into the extracellular environment. Findings from more recent studies, including our own investigations, have demonstrated that NETosis, a neutrophil cell death process, can result in a selective extrusion of inflammatory mitochondrial DNA; a process which is enhanced in patients with lupus and rheumatoid arthritis. In this review, we will summarize the evolution of cfDNA, both nuclear and mitochondrial DNA, as biomarkers for autoimmune rheumatic diseases and discuss limitations, challenges and implications to establish cfDNA as a biomarker for clinical use. This review will also highlight recent advancements in mechanistic studies demonstrating mitochondrial DNA as a central component of cfDNA in autoimmune rheumatic diseases.