Last Updated: January 21, 2020
On premise customers with the Office 365 client began seeing unexpected credential prompts in Outlook for Windows starting on or after November 11th. This issue occurs if the Office 365 tenant has at least one mailbox in the cloud.
Below are the two main options to resolve the issue:
1. Sync all your mailboxes to Office 365 as mail users so they are known hybrid users and get redirected back to on premises.
For more information see these reference materials:
Exchange hybrid deployment considerations which links out to this more specifically on AzureAD connect for syncing: Azure AD Connect sync: Understand and customize synchronization
Active Directory Synchronization is also listed as a pre-requisite for Exchange Hybrid: Hybrid deployment prerequisites
Active Directory synchronization: Deploy the Azure Active Directory Connect tool to enable Active Directory synchronization with your on-premises organization.
Learn more at Azure AD Connect User Sign-on options.
2. Use the PowerShell AutodiscoverPartialDirSync option when your tenant has Directory Synced some of your Active Directory users into the cloud, but you still have on-premises Exchange users that are not Directory Synced.
This parameter is available only in the cloud-based service.
The AutodiscoverPartialDirSync option is for scenarios where tenants have Directory Synced some of their Active Directory users into the cloud, but still have on-premises Exchange users that are not Directory Synced. Setting this flag to true will cause unknown users to be redirected to the on-premises endpoint and will allow on-premises users to discover their mailbox automatically. Online email addresses will be susceptible to enumeration. It is recommended to full Directory Sync all Active Directory users and leave this flag as the default False.
After you enable AutodiscoverPartialDirSync, it will take approximately 3 hours to fully saturate across the cloud.
Type: Boolean Parameter Sets: Default Aliases: Applicable: Exchange Online Required: False Position: Named Default Value: False Accept pipeline input: False Accept wildcard characters: False
For instructions using PowerShell see this topic, Connect to Exchange Online PowerShell.
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