How can I change the location of docker images when using Docker Desktop on WSL2 with Windows 10 Home?

The WSL 2 docker-desktop-data vm disk image would normally reside in: %USERPROFILE%\AppData\Local\Docker\wsl\data\ext4.vhdx

Follow the following to relocate it to other drive/directory, with all existing docker data preserved (tested against Docker Desktop 2.3.0.4 (46911), and continued to work after updating the 3.1.0 (51484)):

First, shut down your docker desktop by right click on the Docker Desktop icon and select Quit Docker Desktop

Then, open your command prompt:

wsl --list -v

You should be able to see, make sure the STATE for both is Stopped.(wsl --shutdown)

  NAME                   STATE           VERSION
* docker-desktop         Stopped         2
  docker-desktop-data    Stopped         2

Export docker-desktop-data into a file

wsl --export docker-desktop-data "D:\Docker\wsl\data\docker-desktop-data.tar"

Unregister docker-desktop-data from wsl, note that after this, your ext4.vhdx file would automatically be removed (so back it up first if you have important existing image/container):

wsl --unregister docker-desktop-data

Import the docker-desktop-data back to wsl, but now the ext4.vhdx would reside in different drive/directory (Note that you will need to create D:\Docker\wsl\data\ if it does not already exist):

wsl --import docker-desktop-data "D:\Docker\wsl\data" "D:\Docker\wsl\data\docker-desktop-data.tar" --version 2

Start the Docker Desktop again and it should work. In the event that Docker Desktop doesn't start correctly, restart the PC and try again.

You may delete the D:\Docker\wsl\data\docker-desktop-data.tar file (NOT the ext4.vhdx file) if everything looks good for you after verifying