How to Configure Exchange Online in Microsoft 365 Step by Step
To configure Exchange Online in Microsoft 365, you must follow clear steps. Many people find it hard because the setup can be tricky. There are also security risks if you miss some settings. Problems can happen with old ways of logging in. Since October 1, 2022, Microsoft turned off Basic Authentication for protocols like POP3 and IMAP. So, you need to configure Exchange Online apps to use Modern Authentication. You will use both the Microsoft 365 admin center and the Exchange admin center for this.
Key Takeaways
Make sure you have the right Microsoft 365 license and admin roles first. This helps you avoid problems and keeps things safe.
Use the Microsoft 365 Admin Center to handle users and licenses. Use the Exchange Admin Center to make and manage mailboxes and email settings.
Set up user, shared, and resource mailboxes with care. Always check mailbox settings to keep email safe and working well.
Give the right permissions with Role-Based Access Control. This lets users manage mailboxes and send emails safely.
Test mail flow and mailbox features often. Use built-in tools to find and fix email problems fast.
Requirements
Licenses and Subscriptions
You need the right Microsoft 365 license before you set up Exchange Online. Not all plans give you every Exchange Online feature. The table below lists which plans have Exchange Online and what each plan offers:
You can give these licenses in the Microsoft 365 admin center, Azure portal, or by using PowerShell. Make sure every user who needs email has a license that includes Exchange Online.
Tip: If you want features like In-Place Archive or Retention policies, you need Exchange Online Plan 2 or Office 365 E3.
Admin Roles
You must have the right permissions to manage Exchange Online. Only users with certain admin roles can set up mailboxes and change settings. The main roles are:
Global Admin: Gives full control over Microsoft 365 and lets you assign other roles.
Exchange Administrator: Lets you manage mailboxes, groups, permissions, and mail flow.
Exchange Recipient Administrator: Needed to manage recipients and give permissions to apps.
You give these roles in the Azure portal under Roles and Administrators. Try to keep the number of Global Admins low to keep things safe.
User Information
Get user details before you begin. You need each user's name, email address, and username. If you want to sync with an on-premises Active Directory, follow these steps:
Set up your domain and check it in Azure.
Set DNS records for mail flow.
Make users in your local domain controller.
Match user UPNs to your email domain.
Install Azure AD Connect to sync users.
Add email addresses and aliases.
Give out licenses.
Test sign-in with Outlook on the web.
Getting this information early helps you set up Exchange Online without problems or delays.
Open Admin Centers
You need to use two admin portals before you set up Exchange Online. Each portal helps with different parts of the setup.
Microsoft 365 Admin Center
The Microsoft 365 Admin Center helps you manage your Microsoft 365 services. You can add users, give out licenses, and set up basic security here. To open it, go to
https://admin.microsoft.com
. Sign in with your admin account. The dashboard shows choices for users, groups, billing, and reports.
Note: The Microsoft 365 Admin Center lets you see everything in one place. You can manage Exchange Online, SharePoint, Teams, and OneDrive from here.
To get started:
Open your web browser.
Type
https://admin.microsoft.com
in the address bar.
Sign in with your Microsoft 365 admin account.
Use the menu on the left to find Users, Groups, or Admin centers.
You will use this portal to give licenses and manage users before you set up Exchange Online mailboxes.
Exchange Admin Center
The Exchange Admin Center (EAC) is the main tool for email management. You use it to make mailboxes, set mail rules, and keep email safe. The new URL for the Exchange Admin Center is https://admin.cloud.microsoft/exchange. Microsoft changed this in October 2024. The old link now sends you to the new one.
To open the EAC:
Open your browser.
Sign in with your admin account.
The Exchange Admin Center is for email tasks. You can manage mailboxes, groups, and anti-spam rules here.
The Microsoft 365 Admin Center manages all Microsoft 365 services.
The Exchange Admin Center gives you more control over email settings and mail flow.
Some advanced email tools are only in the Exchange Admin Center.
Tip: Use the Microsoft 365 Admin Center for user and license tasks. Use the Exchange Admin Center when you need to set up Exchange Online features or fix email problems.
Configure Exchange Online
Setting up Exchange Online mailboxes is an important step. You need to make user mailboxes, shared mailboxes, and resource mailboxes. Check mailbox settings to make sure everything works right. Follow these steps to set up Exchange Online for your group.
Create Mailboxes
You can make new user mailboxes in two ways. Use the admin center or PowerShell. Here are simple steps for both:
Using Microsoft 365 Admin Center:
Open the Microsoft 365 admin center.
Click "Users," then "Active users."
Pick "Add a user."
Type the user's name and username.
Give the user an Exchange Online license. This makes a mailbox.
Save your changes.
Using PowerShell:
Start Exchange Online PowerShell.
Run this command to make a new mailbox:
New-Mailbox -Name "Pilar Pinilla" -UserPrincipalName pilarp@contoso.com -Password (Read-Host "Enter password" -AsSecureString) -FirstName Pilar -LastName Pinilla
After making the mailbox, check it with this command:
Get-Mailbox -Identity "Pilar Pinilla" | Format-List Name,DisplayName,Alias,PrimarySmtpAddress,Database
You will see the new mailbox in the Exchange Admin Center under Recipients > Mailboxes.
Tip: Always check that you gave the right license. If not, the mailbox will not work.
Shared and Resource Mailboxes
Shared and resource mailboxes help teams and groups. They help manage group emails and things like meeting rooms. You can set up Exchange Online to use these mailbox types.
Shared Mailboxes:
Make a normal mailbox first. Then change it to a shared mailbox in the Exchange Admin Center.
Give users permission to read and send emails from the shared mailbox.
In hybrid setups, make shared mailboxes on-premises first. Move them to Exchange Online later to stop problems.
Shared mailboxes have storage limits. They cannot encrypt sent emails.
Users use their own login to open shared mailboxes. Keep security in mind.
Resource Mailboxes (Rooms and Equipment):
In the Exchange Admin Center, go to Recipients > Resources.
Click "Add a resource mailbox." Pick "Room" or "Equipment."
Use clear names like "ConfRoom-1stFloor-10Seats" so people can find them.
Set things like how many people fit, where it is, and booking rules.
Choose if someone must approve bookings or if the system does it.
Pick someone to manage requests if needed.
Change permissions in the Delegation tab for Send As, Send on Behalf, and Full Access.
Note: In hybrid setups, always make resource mailboxes in the right place. This helps stop sync problems.
Mailbox Settings
After you make mailboxes, check and change the settings. Make sure they fit your group’s needs. You can set up Exchange Online mailboxes for safety, storage, and how users use them.
Communication Management:
Turn on or off things like instant messaging and text messaging.
Control if contacts sync with LinkedIn or phones.
Information Management:
Set up journaling and inbox rules.
Add ways to recover deleted items.
Use retention policies to control how long emails stay.
Security and Access:
Change password rules if needed.
Set mailbox size limits and warnings.
Pick message size limits for sending and getting emails.
Turn on or off mailbox access types like IMAP, POP, and ActiveSync.
User Experience:
Let users change themes, email signatures, and calendar settings.
Turn on or off things like weather updates and special calendars.
Mailbox Approval and Synchronization:
Approve mailboxes by picking the mailbox and clicking "Approve Email" in the admin center.
Give the "Delegated Mailbox Approver" role to let others approve mailboxes.
Set up mailbox sync with Server-Side Synchronization for emails, meetings, contacts, and tasks.
Test and turn on mailbox settings to make sure email works.
Tip: Check mailbox plans and rules often. Use PowerShell commands like
Set-MailboxPlanandSet-CASMailboxPlanto change settings for many users.
If you follow these steps, you can set up Exchange Online for your users, teams, and resources. Always check mailbox settings after you make them to keep things safe and working right.
Permissions and Mail Flow
Assign Permissions
You must give the right permissions so users can manage mailboxes. This also lets them send emails for others. Exchange Online uses Role-Based Access Control, or RBAC, for permissions. You can give roles to users or groups. These roles let people do things like manage recipients or check audit logs.
Important mailbox permissions are:
Full Access: Lets someone open and manage another mailbox.
Send As: Lets you send emails as if you are the mailbox owner.
Send on Behalf: Lets you send emails for the owner. Both names show in the From field.
ChangeOwner: Lets you change who owns mailbox items or folders.
ChangePermission: Lets you change who can access mailbox items or folders.
You can give these permissions in the Exchange Admin Center or with PowerShell. For example, to give "Send As" permission with PowerShell, use this command:
Add-RecipientPermission "MailboxName" -AccessRights SendAs -Trustee "UserName"
Tip: Use role groups to control who can manage mailboxes. This helps keep your setup safe and neat.
Mail Flow Rules
Mail flow rules help control how emails move in your group. You can use these rules to block emails with private info. You can also add disclaimers or send emails for approval.
Best ways to use mail flow rules:
Test each rule before using it for everyone.
Make rules for certain users, groups, or domains.
Use exceptions so actions do not repeat, like adding disclaimers twice.
Stop rule processing after a blocking rule to avoid extra steps.
These rules help you follow rules and keep your email safe.
Automatic Replies
You can set up automatic replies, also called Out of Office, in Outlook on the web. This sends a message when you are away.
To turn on automatic replies:
Log in to Outlook on the web.
Click the gear icon for Settings.
Pick Mail, then Automatic replies.
Turn on automatic replies.
Set a time if you want.
Write your message for people inside and outside your group.
Save your changes.
Note: If you do not set a time, remember to turn off automatic replies when you get back.
Client and Protocol Setup
Outlook Configuration
You can connect Outlook to Exchange Online easily and safely. Outlook 2016, 2019, 2021, and Microsoft 365 use Autodiscover. This tool finds your mailbox settings for you. When you open Outlook for the first time, type your email address. Outlook will set up your account by itself. You do not need to type in server names or port numbers. Modern authentication is turned on for Outlook 2013 and newer. This helps keep your connection safe. If you want to use more than one mailbox, you can add extra profiles in Outlook settings or the Windows Control Panel. Cached mode is turned on by default. This makes Outlook faster, even with big mailboxes.
Tip: You cannot set up Exchange accounts by hand in Outlook 2016 or newer. Always use the automatic setup for the best results.
IMAP and POP3
Some email apps use IMAP or POP3 to connect to Exchange Online. These protocols are usually turned on unless your admin uses security defaults. You can check or change these settings in the Exchange Admin Center or with PowerShell.
To turn off POP3 or IMAP for new mailboxes, use these PowerShell commands:
$defaultPlan = Get-CASMailboxPlan -IsDefault | Select-Object -First 1
Set-CASMailboxPlan -Identity $defaultPlan.Identity -PopEnabled $false
Set-CASMailboxPlan -Identity $defaultPlan.Identity -IMAPEnabled $false
Note: IMAP and POP3 do not give you all Exchange features. Use Outlook or Outlook on the web for the best experience.
Third-Party Integrations
Sometimes you need to connect Exchange Online with other tools. These can be mail filters or office devices that send emails. Some groups use both on-premises and cloud mailboxes. To set up Exchange Online for these cases, follow these steps:
Set up your Microsoft 365 tenant.
Install Exchange Server on-premises if you need hybrid mail flow.
Run the Hybrid Configuration Wizard to link your systems.
Sync users with Microsoft Entra Connect.
Set up mail routing between on-premises and cloud.
Change mail format settings to stop problems like Winmail.dat files.
Getting help from an expert can make things easier. Always check your domain and test mail flow after you finish setup.
Test and Verify
Send/Receive Test
You need to make sure mailboxes work right. Pretend you are sending a real email between two Exchange Online mailboxes. Here is how you do it: First, set up a sender mailbox just for testing. Next, pick a mailbox to get the test email. Add a special tag in the subject so you can find the test email later. Send the test message from the sender to the receiver. Check if the receiver gets the email. Try this test at different times to see if it always works. Use the Exchange Online web service URL if you want to do more advanced tests or use automation. If you need extra security, turn on certificate-based authentication with Azure AD.
Tip: Always use the same special tag for both sender and receiver tests. This makes it easy to follow the message from start to finish.
Check Mail Flow
You can use built-in tools to see how emails move in your system. These tools help you find problems fast. Use the message trace tool in the Exchange Admin Center to see where emails go. Look at Non-Delivery Reports (NDRs) to find out why emails do not arrive. Check transport rules to make sure they do not stop or change emails by mistake. Make sure connector settings are right for both incoming and outgoing mail. Look at message tracking logs to see details about sent and received emails. Check Exchange Online Protection (EOP) settings to make sure spam filters do not block good emails. Make sure senders have the right permissions and check DNS records like MX, SPF, DKIM, and DMARC.
If you see problems with delivery, check if the recipient domains have blocks or are blacklisted.
Troubleshoot
You might have problems when setting up or testing. Here are some common issues and how to fix them:
Always check Microsoft 365 service health first. Use the Microsoft Support and Recovery Assistant for quick help. Look at error codes in NDRs to find and fix delivery problems.
You can set up Exchange Online by doing these things: First, pick Exchange Online and use OAuth authentication. Next, choose Microsoft Graph API to keep your connection safe. Then, register your app or use the Alloy Mail Connector. After that, log in with an admin account. Pick which mailbox folder you want to watch. Try the connection to make sure you have access.
Always check your setup with test users so you do not have problems.
Keep checking permissions, watch mail flow, and update security rules often.
Look at the Exchange Online documentation if you need help with more settings or fixing problems.
FAQ
How do you assign an Exchange Online license to a user?
You give a license in the Microsoft 365 admin center.
Click Users > Active users.
Pick the user you want.
Click Licenses and apps.
Mark the box for Exchange Online.
Click save to finish.
What should you do if Outlook cannot connect to Exchange Online?
First, see if your internet works.
Then, close Outlook and open it again.
If it still does not work, use the Microsoft Support and Recovery Assistant.
Check that your account uses Modern Authentication.
Can you migrate mailboxes from on-premises Exchange to Exchange Online?
Yes, you can move mailboxes.
Use the Hybrid Configuration Wizard for hybrid setups.
For cutover or staged moves, follow steps in the Exchange Admin Center.
Test a few mailboxes first before moving everyone.
How do you reset a user's mailbox password?
Open the Microsoft 365 admin center.
Click Users > Active users.
Pick the user.
Click Reset password.
Follow the steps to make a new password.