Please note that the solution below might not apply to your situation, as there are a multitude of reasons why Outlook might keep prompting you for credentials. But I’ve found the following to work for to separate organizations now so I though it would be worth sharing.
The issue is caused by Microsoft rolling out new policies which require the use of two factor authentication. But at the same time, your Exchange tenant is not set-up to allow the modern-style authentication. This throws users into an authentication loop which they cannot get out of without changing the Exchange configuration. So what do you need to do?
- Use the PowerShell Exchange cmdlets to connect to Exchange Online. The details for doing so can be found here: https://docs.microsoft.com/en-us/powershell/exchange/exchange-online/connect-to-exchange-online-powershell/connect-to-exchange-online-powershell?redirectedfrom=MSDN&view=exchange-ps.
- Note that you’ll need to connect with a user which has both administrative privileges over Exchange Online, as well as Azure Active Directory. Either one of those is not sufficient!
- Run the following cmdlet:
And look for the setting named “OAuth2ClientProfileEnabled“. Chances are that lists as “False”, being disabled.
PowerShell1Set-OrganizationConfig -OAuth2ClientProfileEnabled $true
To enable this setting for your organization.
This setting affects the ability to use the modern OAuth authentication pop-up (the one you know from the browser with the nice background) instead of the old-fashioned network-style login. And when using two-factor authentication, the modern pop-up is the only one which is compatible.
I found that after enabling the setting it’s sometimes necessary to close Outlook and reopen it for the prompt to appear. In rare cases we needed to remove the account and re-add it to Outlook. But from that point on things usually started to work.
Oh, and when you’re at it; enforce multi-factor authentication! Most users are used to it by now from consumer products / applications and it really boosts your level of security by a lot. Hope this helps!