How do I restore an iPhone from a backup located on an external drive? I back my iPhone up to my Mac. Since I don't have much space on my Mac, I moved my iTunes backup folder to an external drive (copy and paste), and then created a symlink from the normal backup folder to the location on the external drive where that particular backup folder is located. I backed my iPhone up, and it seems to change the backup on the external drive (I can tell by looking at the date modified of the files in the backup folder). 

Now, there are two problems I've noticed with this. Firstly, when I connect my device and look in iTunes, it says "Latest Backup: Your iPhone has never been backed up to this computer" – even though it has been backed up (although to an external drive). The worse part is that the "Restore Backup..." button is grayed out, not allowing me to restore my iPhone from the backup.

Another thing I should mention is that when I go to iTunes > Preferences > Devices, I don't see my iPhone backup in the list. I was under the impression that symlinks worked on a low enough level such that applications like iTunes would be fooled into thinking they were on the main drive itself. That isn't the case though, apparently.

So, how do I restore my iPhone from my backup (other than perhaps buying a new Mac with a larger internal hard drive)? I hardly have enough space to move the device backup folder over to my main drive, so I'd like to leave that as a last option.
I was unable to restore from this backup because I had symlinked the iPhone backup's individual folder,

Volumes/External Drive/iPhone Backups/UF34...


into my Backups folder located at 

~/Library/Application Support/MobileSync/Backups/.


This causes some issues. What you need to do is to symlink the backup folder into the MobileSync directory in your user folder. In other words, you need to create a symlink for the folder which contains all your iPhone backups (the folders with the weird numbers),

Volumes/External Drive/iPhone Backups/Backups


inside this folder on your disk

~/Library/Application Support/MobileSync/


I believe you need to rename (or delete) the Backup directory which is already on your hard disk if you want to do this.

I realize that this process might be slightly confusing if one has not used symlinks very often, so feel free to leave a comment here and I will try to make this answer clearer if I can.