Knowledge of the ion composition in the near-Earth's magnetosphere and plasma sheet is essential for the understanding of magnetospheric processes and instabilities. The presence of heavy ions of ionospheric origin in the magnetosphere, in particular oxygen (O+), influences the plasma sheet bulk properties, current sheet (CS) thickness and its structure. It affects reconnection rates and the formation of Kelvin-Helmholtz instabilities. This has profound consequences for the global magnetospheric dynamics, including geomagnetic storms and substorm-like events. The formation and demise of the ring current and the radiation belts are also dependent on the presence of heavy ions. In this review we cover recent advances in observations and models of the circulation of heavy ions in the magnetosphere, considering sources, transport, acceleration, bulk properties, and the influence on the magnetospheric dynamics. We identify important open questions and promising avenues for future research.