Can I cancel the Windows 10 Free Upgrade?

Per Microsoft Windows 10 Q&A;

Yes, you can cancel your reservation at any time prior to installing Windows 10. Here’s how:

• Right click on the Get Windows 10 App or Windows icon located in right end of the taskbar.
• Select “Check your upgrade status”
• Select “Cancel reservation”

Since it hasn't been pointed out, it's also possible windows will download the Windows 10 upgrade without having to reserve it. This wasn't the original article that I have read about it, but this also includes a link to how to remove the download.

http://www.extremetech.com/extreme/213979-microsoft-thinks-youll-love-windows-10-so-much-it-downloads-it-for-you-without-asking

So reserved or not, you may still have the 6GB download on your computer.

Edit: The first article says this about the folder.

According to the Inquirer, a user who had never “reserved” a copy of Windows 10 in the first place found a large 6GB download sitting in the $Windows.~BT hidden directory, and a series of failed “Upgrade to Windows 10″ tasks in Windows Update’s history. In several cases, the new OS has been downloaded over metered connections, forcing people over their bandwidth caps in the process. When the Inquirer reached out to Microsoft, the company said the following: “For individuals who have chosen to receive automatic updates through Windows Update, we help upgradable devices get ready for Windows 10 by downloading the files they’ll need if they decide to upgrade.

The section on deleting the folder shows this:

In Windows 7, you do this by clicking on “Tools,” then “Folder Options,” and finally “Show Hidden Files and Folders,” as shown below. In Windows 8/8.1, click on the View tab and then select the “Hidden items” check box.

Once this is done, check your Windows directory for a directory named $WINDOWS.~BT. The icon may be translucent, since the folder is normally hidden, so check carefully. You can delete this folder if you wish, but doing so won’t actually prevent Microsoft from downloading the setup program again. Once the OS has decided that you’re going to install Windows 10, it’s downright pushy about having the data locally. The only solution, according to various sources, is to actually remove a specific Windows Update: KB3035583.

KB3035583 is described by Microsoft as installing “the Get Windows 10 app, which helps users understand their Windows 10 upgrade options and device readiness.” It can be uninstalled by navigating to Windows Update from within the Control Panel, choosing “Programs and Features,” and then selecting the “View Installed Updates” option. Remove this update and then delete the folder, and you’ll reclaim your lost disk space.

KB 3035583 can then be blocked from installing again by hiding the update from within the Windows Update setting in Control Panel.

There are facets to this situation that aren’t fully understood as yet. My own Windows Update history shows that I installed KB3035583 on the 26th of July, as shown below.

Despite this, there’s no sign that my system ever downloaded Windows 10, and I have no record of failed W10 installations (another reported commonality) in my own Windows Update history. In some cases, this MS update clearly triggers a download process, but in others, it does not seem to do so. I personally run Windows 7 Professional, but IE11 and Windows Update have both been incessantly nagging me to upgrade.

One potential reason for this is that I keep Windows set to “Check for updates but let me choose whether to download and install them.” It’s possible that this setting keeps Windows 10 from downloading whether you’ve installed KB 3035583 or not.

As others have noted, Windows may download the files for your PC "ready" for you to install it.

I found the best way to prevent a Windows 10 download was to remove the Windows Update that causes it to nag. Simply remove: KB3035583

And your PC should lose the ability to nag for Windows 10 or download it. Either uninstall it from the control panel applet or from the command prompt (sites such as this one should guide you through it).

Then "Hide" the update so it doesn't automatically install again. I think a lot of people who have seen it again have forgotten this bit and have set their PC to automatically install updates without prompting, which would cause the cycle to repeat again.

To hide a Windows Update you have recently removed simply tell Windows to "Check for Updates" again from the "Windows Update" option in Control Panel, it will tell you there is an update to install, select the message that appears like "1 important update is available", it should list the updates it would like to install, right click the update you do not wish to install and select "Hide update".

If at any point you change your mind about a hidden update, simply go back to the "Windows Update" option in Control Panel and select "Restore hidden updates" on the left hand side.

Microsoft also created a KB article and relased a troubleshooter to disable the upgrade:

Canceling your scheduled Windows 10 Upgrade
https://support2.microsoft.com/kb/3095675/en-us

If you’d prefer not to upgrade to Windows 10 at this time, you can cancel the scheduled upgrade by running this troubleshooter. When you run the troubleshooter, it will give you the options Continue Upgrade as Scheduled or Upgrade Later.

If you change your mind and choose Continue Upgrade as Scheduled, the troubleshooter will make no changes, and will give you a confirmation message "Continue Upgrade as Scheduled."

If you select Upgrade Later, the troubleshooter will run and give you the confirmation message "Upgrade Later. Your scheduled upgrade time has been canceled." You will still be able to upgrade by using the Get Windows 10 app that you used to reserve the upgrade. It should appear as a Windows icon in your taskbar system tray.