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How to Fix App Password Option Greyed Out in Microsoft 365
Question details
Administrators or users are unable to create app passwords because the option is completely unavailable or greyed out in the authentication menu.
- Product
- Microsoft 365
- Device & OS
- not provided
- Scenario
- Attempting to generate an app password to allow legacy applications or devices that do not support modern authentication to connect to Microsoft 365 services.
- Observed behavior
- The App Password feature does not appear among the authentication choices, or the setting is visible but greyed out and inaccessible.
Ensure you have global administrator or security administrator privileges in your Microsoft 365 tenant, as resolving this requires accessing organizational authentication policies.
Enable App Passwords in Multi-Factor Authentication Service Settings
Check your organization's MFA service settings to ensure the global policy allows the creation of app passwords.
By default, newer Microsoft 365 tenants may have legacy authentication features disabled. An administrator must explicitly allow app passwords if older applications need to connect.
Sign in to the Microsoft Entra admin center (formerly Azure AD) with your administrator credentials.
Go to Users > All users, and select 'Per-user MFA' from the top menu.
On the multi-factor authentication page, click on 'service settings' at the top of the screen.
Under the 'app passwords' section, check the box labeled 'Allow users to create app passwords to sign in to non-browser apps'. Click Save and wait a few minutes for the policy to take effect.
Check Security Defaults and Conditional Access Policies
Security defaults block legacy authentication methods, overriding individual MFA settings and making app passwords unavailable.
Open a Microsoft Support Request
If all policies are correctly configured and the option remains missing, escalate the issue to Microsoft Support.
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Frequently Asked Questions
Why is Microsoft phasing out App Passwords?
Microsoft is deprecating app passwords because they rely on Basic Authentication, which is highly vulnerable to credential guessing and cannot enforce Multi-Factor Authentication (MFA). They encourage transitioning to Modern Authentication (OAuth 2.0).
Can I use App Passwords if Security Defaults are enabled?
No. When Security Defaults are enabled in your Microsoft Entra ID tenant, all legacy authentication methods are blocked, which completely disables the generation and use of App Passwords.
How do I connect older email clients without an App Password?
You should upgrade your email client to a version that natively supports Modern Authentication (OAuth 2.0), such as recent versions of Outlook, Apple Mail, or Thunderbird. If the software cannot be upgraded, it may no longer be able to connect securely to Microsoft 365.
