I am currently setting up a document management system in our SP Online system. A column of the Doc Library is called "Project Name". I created a List ("Project List") containing the Project Name options and setup this doc library column as a Lookup to that List. Because the list of Project Names will continuously grow, I added a second column (Yes/No type) to the Project List called "Active?" to mark if the project name item is an active (Yes) or inactive (No) project. I would like to control the Project Name options displayed to the user to only show the Project List items that have the "Active?" flag set to Yes. Is that possible and if so would you please explain how? Deleting the inactive projects from the List won't work because it removes the metadata created for previously created documents with that Project Name (when it was an Active project).
Could you use InfoPath Designer on your farm?
If yes, you can use InfoPath to customize the list and filter the lookup values.
More information, refer to Creating filtered lookups in SharePoint 2010 with InfoPath 2010