SharePoint Online Intelligent Versioning and the 500 Version Limit

SharePoint Online intelligent versioning uses algorithms to decide what file versions must be kept for file recoverability. Unwanted versions are discarded (trimmed). A notional 500 version limit applies when intelligent versioning is in force but if data lifecycle management (retention) is used, SharePoint cannot trim versions to keep within the 500 version threshold. Some change is needed to resolve the conflict.

https://office365itpros.com/2025/01/06/intelligent-versioning-500/