Background State-of-art non-invasive diagnosis processes for bladder cancer (BLCA) harbour shortcomings such as low sensitivity and specificity, unable to distinguish between high- (HG) and low-grade (LG) tumours, as well as inability to differentiate muscle-invasive bladder cancer (MIBC) and non-muscle-invasive bladder cancer (NMIBC). This study investigates a comprehensive characterization of the entire DNA methylation (DNAm) landscape of BLCA to determine the relevant biomarkers for the non-invasive diagnosis of BLCA. Methods A total of 304 samples from 224 donors were enrolled in this multi-centre, prospective cohort study. BLCA-specific DNAm signature discovery was carried out with genome-wide bisulfite sequencing in 32 tumour tissues and 12 normal urine samples. A targeted sequencing assay for BLCA-specific DNAm signatures was developed to categorize tumour tissue against normal urine, or MIBC against NMIBC. Independent validation was performed with targeted sequencing of 259 urine samples in a double-blinded manner to determine the clinical diagnosis and prognosis value of DNAm-based classification models. Functions of genomic region harbouring BLCA-specific DNAm signature were validated with biological assays. Concordances of pathology to urine tumour DNA (circulating tumour DNA [ctDNA]) methylation, genomic mutations or other state-of-the-art diagnosis methods were measured. Results Genome-wide DNAm profile could accurately classify LG tumour from HG tumour (LG NMIBC vs. HG NMIBC: p = .038; LG NMIBC vs. HG MIBC, p = .00032; HG NMIBC vs. HG MIBC: p = .82; Student's t-test). Overall, the DNAm profile distinguishes MIBC from NMIBC and normal urine. Targeted-sequencing-based DNAm signature classifiers accurately classify LG NMIBC tissues from HG MIBC and could detect tumours in urine at a limit of detection of less than .5%. In tumour tissues, DNAm accurately classifies pathology, thus outperforming genomic mutation or RNA expression profiles. In the independent validation cohort, pre-surgery urine ctDNA methylation outperforms fluorescence in situ hybridization (FISH) assay to detect HG BLCA (n = 54) with 100% sensitivity (95% CI: 82.5%-100%) and LG BLCA (n = 26) with 62% sensitivity (95% CI: 51.3%-72.7%), both at 100% specificity (non-BLCA: n = 72; 95% CI: 84.1%-100%). Pre-surgery urine ctDNA methylation signature correlates with pathology and predicts recurrence and metastasis. Post-surgery urine ctDNA methylation (n = 61) accurately predicts recurrence-free survival within 180 days, with 100% accuracy. Conclusion With the discovery of BLCA-specific DNAm signatures, targeted sequencing of ctDNA methylation outperforms FISH and DNA mutation to detect tumours, predict recurrence and make prognoses.