Last Updated: December 3, 2019
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.
Important: This task contains steps that tell you how to modify the registry. However, serious problems might occur if you modify the registry incorrectly. Therefore, make sure that you follow these steps carefully. For added protection, back up the registry before you modify it. Then, you can restore the registry if a problem occurs.
2. For on premises users, enable the ExcludeExplicitO365Endpoint registry key documented in this KB article, Unexpected Autodiscover behavior when you have registry settings under the \Autodiscover key.
Value = 1
For more information about the ExcludeExplicitO365Endpoint reg key and the Autodiscover implementation, please see this KB article Outlook implementation of Autodiscover.
Note: It is recommended to remove this registry key if you migrate users to the cloud.
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