Microsoft has updated the OneDrive app for Mac to support syncing files to external hard drives

Microsoft published a blog post yesterday (June 12) announcing improvements to OneDrive for macOS that allows users to sync files to removable disks.
Note: For Mac users, internal storage is not upgradeable is a common problem, and many rely on external hard drives for expansion space. Microsoft OneDrive for macOS previously only supported syncing files to a local disk, but in the latest version, syncing to an external external hard drive is supported.

The sync method hasn’t changed, if a user unplugs a drive (such as a portable SSD), OneDrive won’t pause syncing with an error message, and if a drive is briefly disconnected, there will be a short delay notification, and resuming sync will require reconnecting the external disk and restarting OneDrive.
It is important to note that the drive needs to be in APFS (Apple File System) format with FileVault protection enabled, and read-only, network, or isolated disks are not supported.
In addition, users need macOS 15.0 or later and OneDrive 25.097 or later. The feature is currently only available to Insiders, but Microsoft says it will be rolled out to more users soon.