SharePoint Online: Delete Version History using PnP PowerShell

Requirement: Delete version history in SharePoint Online.

How to Delete versions in SharePoint Online?
To delete previous versions of a file in SharePoint Online, follow these steps:

• Navigate to your SharePoint Online document library, Select the file and then click on "Version History" from the toolbar. (or Select "Version History" from the context menu of the document)
• On the version history page, You can choose "Delete" from the context menu of the particular version. To delete all versions of a document or list item, in the Version history page, click the "Delete All Versions" link, and then confirm the prompt.
  

SharePoint Online: Delete Version History using PnP PowerShell
Lets delete all versions of all items in a list or library using PowerShell.

#Config Variables
$SiteURL = "https://crescenttech.sharepoint.com/sites/marketing"
$ListName="Documents"

#Connect to PnP Online
Connect-PnPOnline -Url $SiteURL -Credentials (Get-Credential)

#Get the Context
$Ctx= Get-PnPContext

#Get All Items from the List - Exclude 'Folder' List Items
$ListItems = Get-PnPListItem -List $ListName -PageSize 2000 | Where {$_.FileSystemObjectType -eq "File"}

ForEach ($Item in $ListItems)
{
    #Get File Versions
    $File = $Item.File
    $Versions = $File.Versions
    $Ctx.Load($File)
    $Ctx.Load($Versions)
    $Ctx.ExecuteQuery()
    Write-host -f Yellow "Scanning File:"$File.Name
    
    If($Versions.Count -gt 0)
    {
        #Delete all versions
        $Versions.DeleteAll()
        $Ctx.ExecuteQuery()
        Write-Host -f Green "Deleted All Previous Versions of the File:"$File.Name
    }
}

PowerShell to Clear Previous Versions by Folder by Folder
Here is a different approach to clear previous versions of all files.

#Parameters
$SiteURL = "https://crescent.sharepoint.com/sites/marketing"
$LibraryName ="Documents"

#Function to Clear all File versions in a Folder
Function Cleanup-Versions([Microsoft.SharePoint.Client.Folder]$Folder)
{
    Write-host "Processing Folder:"$Folder.ServerRelativeUrl -f Yellow
    #Get the Site Relative URL of the folder
    $FolderSiteRelativeURL = $Folder.ServerRelativeURL.Replace($Web.ServerRelativeURL,"")

    #Get All Files from the folder    
    $Files = Get-PnPFolderItem -FolderSiteRelativeUrl $FolderSiteRelativeURL -ItemType File
    
    #Iterate through each file
    ForEach ($File in $Files)
    {
        #Get File Versions
        $Versions = Get-PnPProperty -ClientObject $File -Property Versions 
        Write-host -f Yellow "`tScanning File:"$File.Name
     
        If($Versions.Count -gt 0)
        {
            #Delete all versions
            $Versions.DeleteAll()
            Invoke-PnPQuery
            Write-Host -f Green "`t`tDeleted All Previous Versions of the File:"$File.Name
        }
    }

    #Get Sub-folders from the folder - Exclude "Forms" and Hidden folders
    $SubFolders = Get-PnPFolderItem -FolderSiteRelativeUrl $FolderSiteRelativeURL -ItemType Folder | Where {($_.Name -ne "Forms") -and (-Not($_.Name.StartsWith("_")))}
    Foreach($SubFolder in $SubFolders)
    {
        #Call the function recursively
        Cleanup-Versions -Folder $SubFolder     
    }
}
 
#Connect to PnP Online
Connect-PnPOnline -Url $SiteURL -UseWebLogin
$Web = Get-PnPWeb

#Get the Root Folder of the Library
$RootFolder = Get-PnPList -Identity $LibraryName -Includes RootFolder | Select -ExpandProperty RootFolder

#Call the function with Root Folder of the Library
Cleanup-Versions -Folder $RootFolder

Keep Last Five Versions and Delete the Rest:
Going through the version history page and deleting one by one is cumbersome. Here is the PnP PowerShell to keep last 'N' versions and delete all others.

#Config Variables
$SiteURL = "https://crescenttech.sharepoint.com/sites/marketing"
$ListName="Documents"
$VersionsToKeep = 5

#Connect to PnP Online
Connect-PnPOnline -Url $SiteURL -Credentials (Get-Credential)

#Get the Context
$Ctx= Get-PnPContext

#Get All Items from the List - Exclude 'Folder' List Items
$ListItems = Get-PnPListItem -List $ListName -PageSize 2000 | Where {$_.FileSystemObjectType -eq "File"}

ForEach ($Item in $ListItems)
{
    #Get File Versions
    $File = $Item.File
    $Versions = $File.Versions
    $Ctx.Load($File)
    $Ctx.Load($Versions)
    $Ctx.ExecuteQuery()

    Write-host -f Yellow "Scanning File:"$File.Name
    $VersionsCount = $Versions.Count
    $VersionsToDelete = $VersionsCount - $VersionsToKeep
    If($VersionsToDelete -gt 0)
    {
        write-host -f Cyan "`t Total Number of Versions of the File:" $VersionsCount
        #Delete versions
        For($i=0; $i -lt $VersionsToDelete; $i++)
        {
            write-host -f Cyan "`t Deleting Version:" $Versions[0].VersionLabel
            $Versions[0].DeleteObject()
        }
        $Ctx.ExecuteQuery()
        Write-Host -f Green "`t Version History is cleaned for the File:"$File.Name
    }
}

This script leaves the recent 'N' number of versions and deletes all previous versions of the documents. To clean up older versions in SharePoint Online using PowerShell CSOM, refer: SharePoint Online: Delete Version History using PowerShell CSOM