A Microsoft file hosting and synchronization service.
Hi Amy Morway
Thank you for reaching out to Microsoft Q&A Forum and sharing your issue.
Based on Microsoft support documentation and macOS troubleshooting best practices, this behavior is not a bug but a result of how macOS categorizes storage. Files synced through OneDrive are stored in the ~/Library/CloudStorage/OneDrive directory, and macOS classifies all content in the Library folder as "System Data" (reflected in the gray bar that continuously recalculates). Consequently, even with Files On-Demand active, any locally downloaded files (such as those accessed for previews or thumbnails) will contribute to this category rather than appearing as distinct OneDrive storage.
You may consider trying these recommended troubleshooting steps:
- Use “Free Up Space” on Files: This is the most direct way to reclaim disk space. For detailed guidance, refer to: Save disk space with OneDrive Files On-Demand for Mac - Microsoft Support
- Adjust sync settings: In OneDrive preferences, go to Account > Choose Folders and uncheck anything you don’t need stored locally. This prevents them from being downloaded in the future.
- Pause and Resume Sync to Address Caching Issues: Temporary sync glitches can lead to excessive caching. From the OneDrive menu bar icon, select Help & Settings > Pause syncing (for at least 2 hours). After a brief wait, resume syncing. Then, verify your storage via Apple menu > About This Mac > Storage > Manage...
- Perform a OneDrive Reset: If issues persist, resetting the application can clear accumulated caches while preserving your cloud files (which will resync). Follow the instructions here: Reset OneDrive - Microsoft Support
- Empty OneDrive Recycle Bin: Deleted files still take up space until permanently removed.
- Minimize Use of "Always Keep on This Device": Reserve this setting for essential offline files only, as it enforces full local downloads and exacerbates System Data growth.
I hope this explanation clarifies the situation and one of these steps helps you resolve the issue. Please let me know how you get on, as your feedback is valuable to the community.
If the answer is helpful, please click "Accept Answer" and kindly upvote it. If you have extra questions about this answer, please click "Comment".
Note: Please follow the steps in our documentation to enable e-mail notifications if you want to receive the related email notification for this thread.