Let’s start of with a clarification: As of today, federating Office 365 (Azure AD) with a Custom STS is NOT supported by Microsoft.  Today the only supported STSs are AD FS 2.0, Shibboleth 2, Optimal IDM Federation Services and PingFederate 6.10.

With that cleared, Office 365 STS supports both WS-Federation & SAML protocols for user authentication which means technically any compatible STS can be used as the Identity Provider STS for Office 365 services or other Relying Parties with a trust relationship with Azure Active Directory.

Azure AD supports In-cloud & Federated Identities.

With In-Cloud identities all user information, including the passwords, are stored in the online directory.

With Federating identities, only basic information is stored in online directory (as shadow accounts) and user identities are mastered in on-premise directories. Passwords are never copied to online directory and Azure AD relies on federation for user sign in.

A key prerequisite for Office 365 SSO is to create federated identities (shadow accounts) in Azure AD and there are different options/tools to do this.

  1. DirSync is the recommended tool but it only supports Active Directory as the identity source. DirSync & AD FS 2.0 are the primary tools to enable federation between an on-premises AD and Azure AD.
  2. Graph API is a new RESTful API to manage online directory and looks very promising for creating cloud-only identities. Graph API today doesn’t support creating Federated identities.
  3. MSOL PowerShell cmdlets: These cmdlets use the SOAP based Provisioning Service and are functionally quite rich. They support most of the operations including the creation of federated identities. I have used these cmdlet for my scenairo. Few commerical tools also wrap these cmdlets to perform various Office 365 provisioning operations.
  4. Forfront Identity Manager (FIM) is another potential option which can create Federated accounts from source directories other than AD but I haven’t explored that in detail.

Now once you have the federated identities provisioned (or synced from your on-premises user identity store) in Azure AD, the next step is to establish a trust relationship between Azure AD and your custom STS. This is assuming you have already done the domain verification etc.

I have used Set-MsolDomainAuthentication cmdlet for this.

Set-MsolDomainAuthentication –DomainName bccoss.com –federationBrandName bccoss.com -Authentication Federated  -PassiveLogOnUri $url -SigningCertificate $certData -IssuerUri $uri -ActiveLogOnUri $ecpUrl -LogOffUri $logoutUrl -PreferredAuthenticationProtocol WSFed


At this stage, if I browse to the Microsoft Online Services portal (http://portal.microsoftonline.com/) and choose to login using my federated domain (@bccoss.com) – I got redirected to my custom STS.

In this case, I’m using Thinktecture STS but that doesn’t work out of box with Office 365 / Azure AD so I have to modify the STS to make it compatible with Azure AD. I’ll explain the Office 365 compatibility requirements of an STS in a future post.

I’ll also try to contribute my Thinktecture modification to code back to git at some point.

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