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

Collaborating with external clients, audit firms, and joint venture partners traditionally required adding external collaborators as “Guests” in Microsoft Teams. However, guest access forces users to manually switch tenants in the Teams client, causing them to miss real-time notifications from their primary home organization. Microsoft Teams revolutionized cross-organization collaboration through Shared Channels powered by Microsoft Entra B2B Direct Connect. External partners can collaborate inside a shared channel seamlessly from within their own home Teams tenant without switching organizations.

Understanding Shared Channels vs Standard and Private Channels

Microsoft Teams structures collaboration into three distinct channel models:

• Standard Channels: Accessible to every member of the host Team.
• Private Channels: Restricted to a specific subset of existing team members.
• Shared Channels: Can be shared with individual users or entire external teams, regardless of whether they belong to the host Team or even the host organization. Participants access the channel directly from their primary Teams navigation bar.

Configuring Cross-Tenant Access in Microsoft Entra Admin Center

Because B2B Direct Connect establishes a reciprocal trust relationship between two separate Microsoft 365 tenants, administrators in both organizations must configure mutual trust policies:

1. Sign into the Microsoft Entra Admin Center (entra.microsoft.com) using Global Administrator or Security Administrator credentials.
2. Navigate to Identity > External Identities > Cross-tenant access settings.
3. Select the Organizational settings tab and click Add organization.
4. Enter the Tenant ID or primary domain name of the partner organization (e.g., partnercompany.com).
5. Once added, click the partner’s Inbound access configuration link:
   • Under the B2B direct connect tab, select Customize settings.
   • In the Users and groups tab, choose Allow access for all users or specify target external groups.
   • In the Applications tab, choose Office 365 to authorize Microsoft Teams access.
   • In the Trust settings tab, check Trust multi-factor authentication (MFA) from Microsoft Entra tenants so external partners do not need to re-register authentication tokens.
6. Configure corresponding rules under the partner’s Outbound access tab, allowing your internal employees to join the partner’s shared channels.
7. The partner organization’s IT department must mirror these exact inbound and outbound settings pointing back to your tenant ID.

Enabling Shared Channels in Microsoft Teams Admin Center

Once Entra B2B Direct Connect policies are active, verify Teams tenant policies:

1. Open the Microsoft Teams Admin Center (admin.teams.microsoft.com).
2. In the left sidebar, navigate to Teams > Teams policies.
3. Select your active global policy (e.g., Global (Org-wide default)).
4. Verify that the following toggles are set to On:
   • Create shared channels: Allows internal team owners to generate shared channels.
   • Invite external users to shared channels: Authorizes sharing with external B2B Direct Connect partners.
   • Join external shared channels: Allows internal staff to participate in partner channels.
5. Click Save.

Creating a Shared Channel in Microsoft Teams

To deploy a shared channel for an active project:

1. In Microsoft Teams, locate your target team, click the More options (…) menu, and select Add channel.
2. In the Channel type dropdown, select Shared – People you choose from your org or other orgs have access.
3. Enter a descriptive channel name (e.g., Project-Helios-JointVent).
4. Click Create.
5. In the sharing prompt, enter the email address of the external partner. Because mutual B2B Direct Connect is established, Teams verifies their organization and adds them directly to the channel.
6. The external partner receives an invitation, and the shared channel appears directly in their native Teams client marked with an external team badge.