Azure File Sync straight from Azure Arc: keep the file server, move the data to Azure

What changes on the file server and what does not

Azure File Sync turns the Windows Server into a cache of a file share in Azure Files. Users keep connecting to the server over SMB, and NTFS permissions are preserved. With cloud tiering, frequently used files stay local while rarely used ones live only in Azure. When opened, the server recalls them.

The page sits in the portal under Azure Arc, Machines, on the server under Windows management. It installs the agent as the "Azure File Sync Agent for Windows" extension, registers the server with an existing or new Storage Sync Service and then leads on to sync group, endpoints and cloud tiering. The extension has existed since agent version 21.2 from July 2025. What is new is that all three steps sit in one place.

What it costs per month

Three sites with one file server each therefore come to 15 US dollars a month in server fees. What usually decides the bill is the size of the share and how often tiered files are recalled.

The Software Assurance discount is not automatic

Azure File Sync is one of the services included in Windows Server Management enabled by Azure Arc. Since January 2026, Arc-enabled servers with Software Assurance get a discounted per-server price, provided the agent is at least version 22.

Connecting the server to Arc is not enough. Microsoft requires an explicit attestation per server, in the portal under Azure Arc, Licenses, Azure Benefits Windows Server, or licensing through Windows Server pay-as-you-go. Without that step, the benefit does not apply.

The documentation does not state the size of the discount. The overview speaks of discounted per-server pricing, while the billing section lists Azure File Sync among the services at no extra cost beyond networking and storage. Only the invoice for the first full month gives a reliable answer.

Check agent versions first

If you already run Azure File Sync, look at agent versions before anything else. Version 20 expired on 29 October 2026, and Microsoft blocks expired agents from connecting to the service. The current release is 23.1 from 1 September 2026, and the discount needs at least version 22.

Get-AzStorageSyncService | ForEach-Object {
  Get-AzStorageSyncServer -ParentObject $_ |
    Select-Object FriendlyName, AgentVersion, AgentVersionStatus,
      AgentVersionExpirationDate, LastHeartBeat
} | Sort-Object AgentVersionExpirationDate | Format-Table

The agent can update itself, either shortly before expiry or as soon as a new version ships. According to Microsoft, the immediate option does not apply to servers in a failover cluster. Those need Microsoft Update or a scheduled window.

Where File Sync fits and where it does not

• Fits: file servers in branch offices, full disks that cloud tiering relieves, and replacing DFS-R between sites.
• Does not fit: databases and file-based applications that open shared data files. Microsoft advises against it because database and log files can drift apart.
• NTFS only. ReFS volumes are not supported, and the system volume cannot use cloud tiering.
• Windows Server 2016 to 2025 only. Arc-enabled Linux servers and NAS shares are ruled out as a source.
• The storage account must allow account key access and sit in the same region as the Storage Sync Service.

Adjust backup and antivirus

With cloud tiering, only part of the files remains on the server. A server backup then either skips tiered files or recalls them and causes egress charges. Microsoft recommends backing up the share in Azure, for example with Azure Backup. Restoring a whole VM or a bare-metal image is not supported while cloud tiering is enabled.

Antivirus software should skip files carrying the attribute for tiered content. Microsoft Defender does so for scheduled scans but not for real-time protection. For third-party products, ask the vendor before switching.

Start with one share

The calmest way in is a single, manageable share with cloud tiering whose recalls and cost you watch for a month. An architecture review decides which shares move into which Azure file share, how backups work from then on and whether the Software Assurance attestation is in place. Your team or service provider handles setup and migration.