Power Platform Community Forum Thread Details

Hi Team,

We are facing an issue with SMTP authentication in Microsoft 365. The account password works fine when logging into the portal, but SMTP authentication is failing in our application.

We have already reset the password and confirmed the SMTP settings (smtp.office365.com, port 587, TLS). The account also has 2FA enabled, but we do not see an option to create an App Password.

Could you please help us verify:

Whether SMTP AUTH is enabled for this user and at the tenant level
If Security Defaults or Conditional Access policies are blocking SMTP authentication
Whether App Passwords are disabled for our tenant

Kindly assist us in identifying what is preventing SMTP login for this account.

Categories:

General topics

Hi!

Your issue is very common and usually comes down to a combination of three blockers. Here's the full checklist to work through:

1. Check if SMTP AUTH is enabled at the tenant level
By default, Microsoft disables SMTP AUTH organization-wide. Verify the current status via Exchange Online PowerShell:

Get-TransportConfig | Format-List SmtpClientAuthenticationDisabled

If it returns `True`, enable it with:

Set-TransportConfig -SmtpClientAuthenticationDisabled $false

2. Enable SMTP AUTH for the specific mailbox
Even if the tenant setting is fine, SMTP AUTH must be enabled per mailbox:
- Go to Microsoft 365 Admin Center → Users → Active users → select the user → Mail → Manage email apps → check Authenticated SMTP → Save changes.

Or via PowerShell:

Set-CASMailbox -Identity <user@domain.com> -SmtpClientAuthenticationDisabled $false

⚠️ Note: changes can take up to 24 hours to propagate.

3. Security Defaults are likely blocking SMTP AUTH
This is the most common hidden cause. If Security Defaults are enabled in your Microsoft Entra tenant, SMTP AUTH is blocked entirely — even if you enable it at the mailbox level. To check:
- Go to Microsoft Entra Admin Center → Properties → Manage Security Defaults.
- If enabled, you must disable Security Defaults to use SMTP AUTH with basic authentication.

4. App Passwords not available? Here's why
App Passwords are only available when MFA is configured via per-user MFA (legacy method), NOT when Security Defaults or Conditional Access are managing MFA. If your tenant uses Security Defaults or Conditional Access, the App Password option simply won't appear in the user's account settings. The fix:
- Disable Security Defaults (step 3 above), OR
- Switch to per-user MFA via Microsoft Entra Admin Center → Users → Per-user MFA, then enable and enforce MFA for the user — after which the App Password option becomes available.

5. Consider OAuth 2.0 as the long-term solution
Microsoft is phasing out basic authentication for SMTP AUTH (planned full deprecation). For applications, the recommended path forward is OAuth 2.0 (XOAUTH2), which doesn't require App Passwords at all.

Hope this helps!
Paolo

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