Is it possible to restore a folder to a previous state?

You’re absolutely right that individual files in OneDrive for Business have version history, but folders themselves don’t have independent versioning. However, there is a way to restore a whole folder (and your entire OneDrive) to a previous state — without having to delete it manually.

Restore your entire OneDrive to a previous point in time

This is the recommended and safest method if you want to roll back all changes in a folder (or your whole OneDrive) to how it was, for example, one week ago.

Steps

1. Go to your OneDrive for Business online:
   https://portal.office.com
2. Click the gear icon in the top-right → Restore your OneDrive
   (If you don’t see this, your admin might need to enable it — it’s available for Microsoft 365 business and enterprise plans.)
3. You’ll see a timeline and activity log.
   Use the slider or calendar to choose a point in time (for example, “7 days ago”).
4. Review the list of changes that will be undone (file deletions, renames, edits, etc.)
5. Click Restore.

OneDrive will roll back all files and folders to how they were at that point.
This includes restoring deleted items, undoing renames, and recovering folder contents.

You can later undo this restore if needed — OneDrive keeps track of the restore action.

To answer your idea:

“Maybe the solution is to delete the folder and then look for a version in the recycle bin — will this work?”

Not quite.
Deleting the folder and restoring it from the recycle bin will only bring back the folder as it existed at the time it was deleted, not as it existed a week earlier (unless that’s when you deleted it).
It won’t recover older versions of the files.

My answers are voluntary and without guarantee!

Hope this will help you.