Configure Password Hash Synchronization (PHS)


The probability that you're blocked from getting your work done due to a forgotten password is related to the number of different passwords you need to remember. The more passwords you need to remember, the higher the probability to forget one. Questions and calls about password resets and other password-related issues demand the most helpdesk resources.

Users and devices are shown connecting to the on-premises AD, Azure AD, Microsoft 365, and SaaS Apps. Password1 is being used to connect.

Password hash synchronization (PHS) is a feature used to synchronize user passwords from an on-premises Active Directory instance to a cloud-based Azure AD instance. Use this feature to sign in to Azure AD services like Microsoft 365, Microsoft Intune, CRM Online, and Azure Active Directory Domain Services (Azure AD DS). You sign in to the service by using the same password you use to sign in to your on-premises Active Directory instance. Password hash synchronization helps you to:

  • Improve the productivity of your users.
  • Reduce your helpdesk costs.

How does this work?

In the background, the password synchronization component takes the user’s password hash from on-premises Active Directory, encrypts it, and passes it as a string to Azure. Azure decrypts the encrypted hash and stores the password hash as a user attribute in Azure AD.

When the user signs in to an Azure service, the sign-in challenge dialog box generates a hash of the user’s password and passes that hash back to Azure. Azure then compares the hash with the one in that user’s account. If the two hashes match, then the two passwords must also match and the user receives access to the resource. The dialog box provides the facility to save the credentials so that the next time the user accesses the Azure resource, the user will not be prompted.


It is important to understand that this is same sign-in, not single sign-on. The user still authenticates against two separate directory services, albeit with the same user name and password. This solution provides a simple alternative to an AD FS implementation.