CDK4/6 inhibition substantially improves progression-free survival (PFS) for women with advanced estrogen receptor-positive breast cancer, although there are no predictive biomarkers. Early changes in circulating tumor DNA (ctDNA) level may provide early response prediction, but the impact of tumor heterogeneity is unknown. Here we use plasma samples from patients in the randomized phase III PALOMA-3 study of CDK4/6 inhibitor palbociclib and fulvestrant for women with advanced breast cancer and show that relative change in PIK3CA ctDNA level after 15 days treatment strongly predicts PFS on palbociclib and fulvestrant (hazard ratio 3.94, log-rank p = 0.0013). ESR1 mutations selected by prior hormone therapy are shown to be frequently sub clonal, with ESR1 ctDNA dynamics offering limited prediction of clinical outcome. These results suggest that early ctDNA dynamics may provide a robust biomarker for CDK4/6 inhibitors, with early ctDNA dynamics demonstrating divergent response of tumor sub clones to treatment.