Difference between Entra ID security groups and M365 groups – and when to use them
In Microsoft cloud environments, groups control access to resources and collaboration. Two different types of groups are used: Entra ID security groups and Microsoft 365 groups (M365 groups), each with clearly defined tasks.
Entra ID security groups regulate technical access to resources and roles. M365 groups connect users with tools for digital collaboration.
In this article, we explain the difference between Entra ID security groups and M365 groups, areas of application, and limitations of both group types – so you can use the right structures in your environment.
Index
Technically clear separation between security and M365 groups
Security groups: Precise control of technical access
Security groups in Entra ID are designed to bundle permissions for resources. They can contain users, devices, and service principals. Nested groups are also possible; however, groups that have been synchronized from the local Active Directory are subject to restrictions.
The groups are not intended for communication or collaboration, but rather for the precise assignment of technical rights. They can be integrated into Entra ID roles, incorporated into conditional access policies, and used for SaaS applications, on-premises resources, or SharePoint access.
Security groups are usually managed in the Microsoft Entra Admin Center.
M365 groups: Focus on collaboration and communication
In contrast, M365 froups are designed for user groups that need shared communication, file storage, and task coordination.
When you create an M365 group, several services are automatically activated. These include a group mailbox in Exchange Online, a SharePoint team website, a shared calendar, a Planner board, a OneNote notebook, and optionally a team in Microsoft Teams. This linking happens automatically and cannot be selectively controlled.
The functionality of an M365 group is available exclusively to users. Devices and other groups cannot be members.
M365 groups can be maintained via multiple interfaces.
Which group is suitable for what and what should be avoided
⚙️ Entra ID security groups are suitable for targeted access to applications, services, and data. They can be dynamically controlled via attributes and allow differentiated assignment at the user or device level.
Rules such as location or operating system can be used for devices, and attributes such as department or city can be used for users. This form of control enables low-maintenance administration.
🤝 M365 groups, on the other hand, not only bundle users, but also grant access to all associated applications via their membership. This close coupling is ideal for projects, teams and collaboration, but unsuitable for purely technical access control.
It is particularly important to distinguish between nested groups:
🚫 M365 groups cannot be used as members of other groups, and security groups cannot be combined with M365 groups. License assignment to nested security groups is also not possible.
This again highlights the difference security groups and M365 groups introduce in terms of structure and interoperability.
Role assignment, PIM, and dynamic memberships
Role assignment with Microsoft Entra PIM
A key advantage of Entra ID security groups is the assignment of roles via Microsoft Entra Privileged Identity Management (PIM).
- Role-assignable groups: Groups can be defined as “role-assignable,” which allows administrative rights to be assigned temporarily (e.g., SharePoint administrators).
- Assignment types: Assignment can be active (direct) or “eligible” (activated when needed).
- Security features: In conjunction with expiration dates, approval workflows and limited activation times, highly secure role concepts can be mapped.
PIM helps to make highly privileged access more secure and minimize it.
Dynamic memberships in Entra ID
Dynamic memberships enable flexible management of group memberships based on user and device attributes.
- Availability in security groups: Dynamic memberships are available for security groups based on user and device attributes.
- Availability in M365 groups: Dynamic memberships are also possible for M365 groups, but only for users.
Rules can be combined and complex queries can be created using Entra ID. Typical criteria include location, department affiliation, or device class.
Management, naming policies, and lifecycle rules
Group management is performed via different admin portals depending on the type:
- Security groups are primarily maintained in the Microsoft Entra Admin Center. Dynamic memberships, role assignments, and access controls can also be configured there.
- M365 groups are also managed in the Microsoft 365 Admin Center, Teams Admin Center, or directly in Outlook and Teams.
- Naming policies and group lifecycles (e.g., automatic expiration dates) are managed centrally in the Microsoft Entra Admin Center or via PowerShell.
Groups can either be populated directly with members or controlled by rules. The role of the group owner is particularly important, as it allows the addition and removal of members to be delegated.
Naming policies can be defined to structure the group inventory. You can enforce uniform prefixes or suffixes such as “Berlin Sales” or “IT Munich.” In addition, a block list prevents unwanted terms.
The lifespan of groups can be controlled using expiration rules. Groups that have not been used for a defined period of time can be deleted automatically. Inactive behavior is checked in advance, and the period is automatically extended if activity is detected. Deleted groups can only be restored via the Entra Admin Center or PowerShell, not via Teams.
Email features, external members, and visibility
M365 groups have a shared mailbox and a group address. This address can be visible or hidden in the global address list. Public groups are visible to all users and can be joined by anyone, while private groups require approval.
For security groups, email addressing is only possible if they are mail-enabled, such as a mail-enabled security group or distribution list. These groups can only be managed via the Exchange Admin Center. Devices and other groups cannot be members of these groups.
my-IAM RealGroup for easier group management
How RealGroup optimizes group management in the cloud
The my-IAM RealGroup service from FirstAttribute offers a well-designed addition to groups.
✅ The solution synchronizes group memberships across system boundaries and connects Entra ID, Active Directory, Microsoft Teams, and third-party applications into a consistent authorization system.
RealGroup detects changes in source systems in real time and automatically transfers them to target systems. This eliminates the need for manual maintenance of group memberships across multiple environments.
RealGroup in practice
RealGroup allows you to create, edit, and delete Entra groups directly via user-friendly interfaces, such as the FirstWare IDM-Portal. Administrators can view all groups centrally, edit members and owners, and control group membership via an intuitive interface.
In conjunction with my-IAM PeopleConnect, groups can be used as distribution lists in the global address book, which is particularly useful for communication processes.
Advanced group automation
Technically, RealGroup works with Delta API, ODATA interfaces, and RealTalk technology. This allows processing of group information from different source systems. Using mapping, members can be automatically assigned the appropriate roles and resources.
A practical scenario is the synchronization of project roles with Microsoft Teams. Project managers get full access, developers only access relevant project files, testers access dedicated test areas, and stakeholders only have read access. All changes in the organization affect the group structure without delay.
RealGroup thus extends the capabilities of Microsoft’s on-board tools with a flexible, scalable, and automated solution for the entire group management lifecycle. Especially in dynamic environments with frequent role changes, multiple systems, and high governance requirements, RealGroup is a robust addition to the Entra and M365 structure.
Summary
At the end of the day, knowing the difference security groups and M365 groups makes it much easier to set things up the right way in your Microsoft environment. Security groups are great for controlling access and permissions, while M365 groups are all about helping people work and collaborate better. Mixing them up can quickly lead to unnecessary complexity or risks. When you understand how each group type works, you can plan more effectively, manage more efficiently, and build a setup that runs smoothly.
More about the my-IAM platform
The my-IAM platform unifies all identities from various source systems and makes them available for any kind of applications and apps. Alongside the Teams-integrated app my-IAM PeopleConnect, it includes the business services my-IAM RealIdentity and my-IAM RealGroup.
You can also reach our team by phone at
+49 8196 998 4330.
