How to Configure Shared Channels and Cross-Tenant Access in Microsoft Teams

Cross-organisational collaboration between corporate enterprises, external vendors, legal counsel, and strategic partners historically required inviting external users as B2B Guests in Microsoft Teams. While functional, the traditional guest model forces external users to constantly switch tenant profiles in the top-right corner of their Teams client. This tenant switching breaks notifications, hides presence indicators, and interrupts workflow continuity.

To eliminate this friction, Microsoft introduced Shared Channels—powered by Microsoft Entra ID (Azure AD) B2B Direct Connect. Unlike standard or private channels, a Shared Channel appears seamlessly inside an external collaborator’s home Teams client alongside their regular internal team channels. Members collaborate, co-author documents stored in dedicated SharePoint document libraries, and participate in channel meetings without switching tenants. This technical guide outlines prerequisites, mutual B2B direct connect trust configuration, Teams admin policies, and channel provisioning workflows.

Channel Comparison: Standard vs. Private vs. Shared

Understanding the architectural differences helps administrators select the appropriate collaboration model:

Channel Architecture	External Member Access	Tenant Switching Required?	SharePoint Backend
Standard Channel	Inherits all team members and B2B guests added to parent team.	Yes (Guests must switch to host tenant).	Subfolder inside parent Team SharePoint site collection.
Private Channel	Restricted subset of parent team members/guests.	Yes (Guests must switch to host tenant).	Dedicated, isolated SharePoint site collection.
Shared Channel	Invites specific internal users, entire internal teams, or external partner domains.	No (Rendered directly in external user’s home tenant).	Dedicated, isolated SharePoint site collection managed via B2B Direct Connect.

Step 1: Configuring Entra ID Cross-Tenant Access Settings

Shared Channels strictly require mutual trust established between both Microsoft 365 tenants via Entra ID B2B Direct Connect. Both organisations must complete these configuration steps:

1. Sign in to the Microsoft Entra admin center with Global Administrator or Security Administrator credentials.
2. Navigate to External Identities > Cross-tenant access settings.
3. Under the Organizational settings tab, click Add organization.
4. Enter the tenant ID or primary domain name of your external partner organisation (e.g., partnercompany.com) and click Add.
5. Click on the newly added organisation to configure directional trust:
   • Inbound access settings: Select the B2B direct connect tab. Under External users and groups, choose Allow access (select All users or restrict to a specific security group). Under Applications, ensure Office 365 / Microsoft Teams is permitted.
   • Outbound access settings: Select the B2B direct connect tab. Under Users and groups, choose Allow access for internal staff needing to join the partner’s shared channels.
6. Critical Requirement: Your partner company’s IT administrator must mirror these exact inbound and outbound B2B direct connect settings pointing back to your tenant ID. Direct Connect cannot function unilaterally.

Step 2: Enabling Shared Channels in Teams Admin Center

Once Entra ID trust is established, verify that Teams channel policies permit shared channel operations:

1. Sign in to the Microsoft Teams admin center.
2. Navigate to Teams > Teams policies.
3. Click your active global or targeted departmental policy (e.g., Global (Org-wide default)).
4. Verify the following toggles are set to On:
   • Create shared channels: Allows authorized team owners to provision shared channels.
   • Invite external users to shared channels: Permits channel owners to add external partner accounts.
   • Join external shared channels: Authorizes internal employees to accept invitations to foreign shared channels.
5. Click Save to commit policy changes.

Step 3: Creating and Sharing a Shared Channel

With policies replicated across both environments, team owners can create the shared workspace:

1. Open the Microsoft Teams desktop client.
2. Locate the target team in the left-hand teams list, click the More options button (three dots), and select Add channel.
3. Enter a descriptive channel name (e.g., Joint Architecture Review).
4. In the Channel type dropdown, select Shared – People you choose from your org or other orgs have access.
5. Click Create. Teams provisions the channel and its associated isolated SharePoint site.
6. In the invitation modal, enter the external collaborator’s full email address (e.g., [email protected]).
7. Teams resolves their Entra ID identity via the B2B direct connect trust. Click Share.
8. The external collaborator receives an email invitation, and the shared channel appears directly in their native Teams client sidebar beneath their standard corporate channels.

Security and Compliance Best Practices

• Conditional Access Trust: In Entra ID cross-tenant settings under the Trust settings tab, check Trust multifactor authentication (MFA) from external Azure AD organizations. This honors the partner’s completed MFA claims, preventing external users from experiencing redundant MFA prompts.
• Data Loss Prevention (DLP): Purview DLP policies apply seamlessly across Shared Channel chat messages and documents. If an external participant attempts to paste credit card numbers or internal confidential data tokens, Microsoft Purview intercepts and blocks the message in real time.
• Auditing External Access: Regularly review external direct connect users and channel memberships using the Microsoft Purview Audit log and Entra ID sign-in telemetry.