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Fix Microsoft 365 New User Password Change Option Greyed Out
Question details
Administrators cannot uncheck the option requiring new users to change their passwords at first sign-in because the setting is permanently selected and disabled.
- Product
- Microsoft 365 Admin Center
- Device & OS
- not provided
- Scenario
- Creating a new user account or resetting credentials in a cloud-only Microsoft 365 environment.
- Observed behavior
- The 'User is required to change their password when they first sign in' checkbox is greyed out, forcing the policy to remain active despite admin preferences.
Ensure you are signed into the Microsoft 365 Admin Center with Global Administrator or User Administrator privileges to access the Service Health dashboard and modify user accounts.
Monitor Service Health for Incident MO897396
Check the official Microsoft 365 Service Health dashboard to track the status of the bug causing this issue.
Microsoft has identified this issue as a known service degradation (incident MO897396) caused by a recent admin center code update. This update inadvertently forced the password-change setting to remain enabled in certain cloud-only environments.
Microsoft is actively working to revert the change. Monitoring the service health dashboard is the best way to know when the permanent fix is deployed to your tenant.
Navigate to the Microsoft 365 admin center and log in with your administrator credentials.
On the left navigation menu, go to 'Health' and select 'Service health'.
Look for issue ID MO897396 under the active incidents list. Review the latest status updates and estimated time of resolution provided by Microsoft.
Bypass the Prompt via Manual Password Reset
Use this temporary workaround to allow users to sign in without being caught in a password-change loop while the incident is ongoing.
Contact Microsoft Support for Persistent Tenant Issues
If the global incident MO897396 is marked as resolved but the setting remains greyed out, you must escalate the issue.
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Frequently Asked Questions
What is Microsoft 365 service incident MO897396?
MO897396 is an official Microsoft 365 service degradation affecting the admin center. An errant code update caused the 'require password change at next sign-in' setting to become locked and greyed out for some cloud-only environments.
Can I use PowerShell to disable the password change requirement?
While PowerShell can normally update user attributes (e.g., using Set-MsolUserPassword -ForceChangePassword $false), service incidents like MO897396 often affect backend synchronization. You can attempt the PowerShell command, but it may fail or be overridden until Microsoft resolves the core degradation.
Will existing users be forced to change their passwords due to this bug?
No. Based on Microsoft's incident reports, this bug primarily affects the interface for creating new users or resetting passwords where the admin center checkbox remains permanently enabled. Existing users who are not currently flagged for a password reset are unaffected.
