Permission & Access Issues

Fix Teams and SharePoint Folder Sharing Restrictions

Maira Mehtab Sep 27, 2026 869 views

Question details

A Teams or SharePoint site owner is unable to share folders or invite users due to restricted sharing settings.

Product: Microsoft Teams and SharePoint
Device & OS: not provided
Scenario: Attempting to share folders or invite external guests to a Teams channel or SharePoint site.
Observed behavior: The sharing options are greyed out or fail, blocking the site owner from inviting intended external users.

Before you start

Ensure you have SharePoint Administrator privileges, as modifying external sharing policies and domain restrictions requires elevated admin access.

Solution 1Recommended

Adjust the SharePoint Sharing Policy

Check and modify the tenant-level external sharing settings in the SharePoint admin center to ensure guest sharing is permitted.

By default, SharePoint and Teams might have external sharing restricted at the tenant level. You must enable it globally before individual sites can share folders with external users.

Access the Admin Center

Open Sharing Policies

In the left navigation pane, expand 'Policies' and click on 'Sharing'.

Adjust the Sharing Slider

Move the external sharing slider for SharePoint and OneDrive to your desired level, such as 'Anyone' or 'New and existing guests'.

Save Settings

Scroll to the bottom of the page and click 'Save' to apply the new sharing policies.

Policy Application Time: It may take a few minutes for the new sharing policy to propagate across all connected Teams and SharePoint sites.

Solution 2

Review Domain Restrictions

Verify if specific external domains are blocked from accessing your SharePoint folders.

Solution 3

Deactivate Limited-Access Lockdown Mode

Turn off the site-level feature that prevents users from accessing folders when limited-access permissions are applied.

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Frequently Asked Questions

Why is the external sharing option greyed out in my SharePoint site?

The external sharing option is often greyed out because your organization's tenant-level sharing policy in the SharePoint admin center is set to a more restrictive level (like 'Only people in your organization'). A global admin must change this setting before individual sites can share externally.

Do SharePoint sharing settings automatically apply to Microsoft Teams?

Yes. Every team in Microsoft Teams relies on a connected SharePoint site for file storage. If SharePoint's external sharing policies restrict access, you will also be unable to share folders from the Teams interface.

Can I share a SharePoint folder with someone who doesn't have a Microsoft account?

Yes, provided the SharePoint admin has allowed sharing via 'Anyone' links (anonymous access) or configured the site to send a one-time email passcode for external guests.

Document & File Issues