This compression method only works on the drives formatted in the NTFS file system. It doesn’t work for the drives that use the FAT32 or exFAT file system.

You can individually compress files on an NTFS volume. They'll turn blue. You can also compress folders, which compresses the contents of the folder.

To compress files and folders with NTFS on Windows 11, use these steps: Open File Explorer. Open the folder to store the files with compression. Click the New button and select the Folder option.

Using NTFS compression involves a trade-off between CPU time and disk activity. Compression will work better in certain types of situations and with certain types of files.

Windows XP only: Today's USB flash drives are huge, but they come formatted with the FAT32 limit of 4GB files—if you want to format them as NTFS under Windows XP you'll need a little trick.

Windows 10 shaves off gigabytes with selective system file compression It'll do away with space-burning recovery partitions, too.

However, it lacks traditional NTFS capabilities (see a comparison table here), including bootable volumes, file compression, encryption, short file names, and support for removable media.