Microsoft 365 users are facing a fresh service degradation affecting Exchange Online, Teams, SharePoint, OneDrive and several admin/security portals, according to Microsoft’s public service-health feed early Tuesday UTC.

The incident is especially relevant for hosted businesses because the reported impact crosses email, file access, collaboration, compliance tooling and administrator sign-in. Microsoft listed the status as “Service degradation” and said the event began Monday, August 31, 2026, at 3:08 p.m. UTC.

In Microsoft’s update, Exchange Online users may be unable to connect or may see degraded functionality, including search failures, across all connection methods. Microsoft also said OneDrive for Business and SharePoint Online users may see failed or delayed file opening, sync issues, stale or missing content, repeated retries and operation timeouts.

Teams impact includes calendar and search issues, stale presence, failed location updates and Teams Rooms or desktop phones showing offline in the Teams admin center. Microsoft also cited intermittent authorization failures in Microsoft Purview and Defender XDR, authentication problems in the Microsoft 365 admin center, and Universal Print job failures.

Microsoft attributed the incident to “an issue within a core authentication configuration used by multiple Microsoft 365 services.” The company said it was seeing widespread recovery for Exchange Online mail connectivity, but warned that queued mail could take longer to drain for some organizations. Remaining recovery work was focused on re-applying a targeted authentication-component fix and restarting infrastructure tied to search functionality.

For site operators and hosting providers, the practical lesson is familiar: Microsoft 365 is often outside the web stack, but it is inside the business-continuity stack. During incidents like this, support desks may lose email visibility, customers may lose access to shared runbooks, and administrators may have trouble reaching tenant health dashboards. Operators should keep independent status bookmarks, out-of-band contacts and non-Microsoft copies of critical incident procedures.

Source: Microsoft service health status.