First released as SkyDrive in August 2007, it allows registered users to store, share, back-up and synchronize their files.

At its launch, OneDrive, then known as Windows Live Folders (codenamed SkyDrive), was provided as a limited beta available to a few testers in the United States.

Shortly thereafter, on August 9, 2007, the service was renamed Windows Live SkyDrive and made available to testers in the United Kingdom and India.

[6] On December 2, 2008, the capacity of an individual SkyDrive account was upgraded from 5 GB to 25 GB, and Microsoft added a separate entry point called Windows Live Photos which allowed users to access their photos and videos stored on SkyDrive.

The updated version featured caching, hardware acceleration, HTML video, quick views, cleaner arrangement of photos and infinite scrolling.

[14] The update also brought additional features such as Open Document Format (ODF) capability, URL shortening services and direct sharing of files to Twitter.

For SkyDrive.com, the updates brought a new "modern" design for the web service consistent with Outlook.com, and along with the UI update the service also received improvements such as instant search, contextual toolbar, multi-select in thumbnail view, drag-and-drop files into folders, and sorting improvements.

For the SkyDrive for Windows desktop and macOS applications, the update brought new performance improvements to photo uploads and the sync experience.

[18] On July 31, 2013, in a joint press release between Sky and Microsoft, it was announced that a settlement had been reached and as a result the 'SkyDrive' name would be changed to 'OneDrive'.

[24] According to Microsoft these changes were a response to people abusing the service by using OneDrive to store PC backups, movie collections, and DVR recordings.

[29] Users who signed up to OneDrive prior to April 22, 2012 were able to opt-in for a limited time offer of 25 GB of free storage upgrade.

The service is built using HTML5 technologies,[12] and files up to 300 MB can be uploaded via drag and drop into the web browser,[30] or up to 10 GB via the OneDrive desktop application for Microsoft Windows and OS X.

[33] The paid storage plan is renewed automatically each year unless Microsoft or the user cancels the service.

[35] In June 2014 it was announced that OneDrive's default storage would increase to 15 GB, putting it in line with its competitor Google Drive.

An additional 15 GB were offered for activating camera roll backup on a mobile device, putting it ahead of Google Drive until November 2015, when this bonus was cancelled.

[37][27][38] Following calls for Microsoft to reverse the reduction decision, Microsoft announced on December 11 of the same year that it would allow existing users to request to have up to 30 GB of free storage unaffected by the reduction, and said it would fully refund customers of Office 365 not satisfied with the 1 TB cap, among other redress.

Syntax highlighting and code completion is available for a number of programming and markup languages, including C#, Visual Basic, JavaScript, Windows PowerShell, CSS, HTML, XML, PHP and Java.

[48][49] OneDrive can use geo-location data for photos uploaded to the service, and will automatically display a map of the tagged location.

The Android, iOS and Windows Phone 8 versions also allow camera photos to automatically be uploaded to OneDrive.

[73] It is a protected area in OneDrive where users can store their most important or sensitive files and photos without sacrificing the convenience of anywhere access.

Personal Vault has a strong authentication method or a second step of identity verification, such as fingerprint, face, PIN, or a code sent via email or SMS.

[75] This allows users of these web services and client apps to browse, view, upload or edit files stored on OneDrive.

A software development kit (SDK) is available for .NET Framework, iOS, Android and Python with a limited set of API for web apps and Windows.

[83] Microsoft has responded by indicating that "strict internal policies [are] in place to limit access to a user's data", and that advanced mechanisms, such as Microsoft's automated PhotoDNA scanning tool, are utilized to ensure users abide with the Code of Conduct and that their account does not contain files in contravention thereof, such as partial human nudity (including art or drawings), or any online surveys.

There have also been concerns about people who have been automatically flagged losing all their Microsoft account data even after being cleared by local law enforcement.

[88][89] Microsoft has a similarly named but unrelated software plus service offering called OneDrive for Business (previously SkyDrive Pro[20][21]).

The physical medium on which the information is stored can be either hosted on-premises or purchased as service subscription from Microsoft.