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Intermediate Move to Microsoft 365 Archive Step for Retention Policies and Labels
Message center notification MC1325441 (updated 4 August 2026, Microsoft 365 roadmap item 561208) announces a new ability to archive files stored in SharePoint Online and OneDrive for Business currently within the scope of Data Lifecycle management retention policies and retention labels. The new capability is only available in tenants where Microsoft 365 Archive is configured. This means that a billing relationship is set up to pay for archive storage. Microsoft 365 Archive offsets its storage against the tenant storage pool for SharePoint Online, so charging only happens when archiving cannot use SharePoint storage.
In a nutshell, Purview can now take an intermediate retention action by moving files from active SharePoint Online and OneDrive storage into Microsoft 365 Archive before a retention period expires. The archived files remain indexed, discoverable, and subject to retention processing until their retention periods end.
Microsoft is deploying the public preview of the feature with the goal of making it available worldwide by mid-September 2026. If all goes well, general availability will follow immediately afterwards, and the production version should be available everywhere by the end of September 2026.
Advantages of Archiving
Exchange Online retention policies have been able to move messages into archive mailboxes for over a decade. SharePoint Online lagged in this respect because no suitable archive destination was available. Microsoft 365 Archive resolved that issue in May 2024. At the time, I noted that archiving files could help tenants deal with digital debris, the obsolete and unneeded information that inevitably accumulates in sites.
The original implementation covered the movement of complete sites to Microsoft 365 Archive. The introduction of file-level archiving in May 2026 made Microsoft 365 Archive more flexible. File-level archiving is at the heart of the new capability.
Two advantages are gained by archiving files. First, storage costs can be reduced because archived content is stored at 75% of the cost of active SharePoint Online storage. Second, archived files cannot be accessed by Microsoft 365 Copilot or third-party AI tools with access to SharePoint and OneDrive via a connector. Incorporating an archive action into retention policies and labels just makes sense.
Practical Example of Where Archiving Helps
We have been working on the Microsoft 365 for IT Pros eBook since 2014. Because we generate monthly updates for our books, over that time, a great number of files have accrued in the SharePoint Online site we use for the book. According to the SharePoint admin center, the site currently holds 157 GB.
It’s reasonable to assume that anything written before 2025 is now out of date. However, AI tools like Copilot can surface information from both current and historical files, making it more difficult to ensure that responses are grounded in the latest content.
A retention label configured with a 15-year retention period applies to all files in the site. Obviously, keeping old chapter files around for 15 years occupies a lot of storage, so it makes perfect sense to use the archive option to move older files to Microsoft 365 Archive beforehand. As you can see from Figure 1, I chose to archive files five years after their last modification. The files will then remain in the archive until the completion of their retention period (another ten years).
Once a retention policy or label is configured with the archive action, it can take up to ten days before the background Purview processes begin to move files to Microsoft 365 Archive. There’s no way to trigger an immediate evaluation and move if you suddenly found the need to free up some SharePoint storage.
After Purview moves files to Microsoft 365 Archive, the SharePoint and OneDrive browser interfaces display an archive icon for archived files. Files can be reactivated immediately for up to seven days following archival. Past that point, it can take 24 hours or more to fetch an archived file back from cold storage.
A Graph API is available to list, archive, and “unarchive” SharePoint Online and OneDrive for Business files. The List API is especially useful for reporting archived files within a site.
An Easy Decision to Implement
If your tenant uses Microsoft 365 Archive, you should review the current set of retention policies and labels to consider whether it makes sense to reconfigure any labels or policies to move inactive files into the archive. Not much benefit, if any, is gained by keeping inactive files online. They’re better in the archive, especially if you use AI tools.
Tenants without Microsoft 365 Archive have a decision to make about whether to implement the solution. In my view, organizations that already use retention policies and labels should seriously consider Microsoft 365 Archive. Depending on how much archived storage a tenant consumes, costs can be modest while providing additional flexibility for managing long-term content. All of which is a good thing.
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