As part of your Exchange Hybrid deployment you might introduce new Exchange Servers into your organization. If you’ve planned your deployment correctly, then these will be covered by Hybrid Exchange licences included within your Office 365 Enterprise subscription.

When you don’t need a Hybrid licence

First and foremost, you must consult Microsoft or your licensing specialist for correct guidance for whether you are licensed correctly. However, there is as a key scenario where you will not need to acquire Exchange Hybrid licences.

If you are running Exchange Server 2010, 2013, 2016 or 2019 then you already have Exchange Hybrid capabilities built in to your Exchange Servers today.

Your Client Access services will be used for Autodiscover services and Exchange Web Services based communications. This includes redirecting clients to the cloud, Federated Sharing for Free/Busy and Mailbox Moves. Your Hub Transport services also have the capability built-in to manage Hybrid mail flow between Office 365 and your Exchange Server.

Adding additional servers to your organization to support Exchange Hybrid is a common piece of bad advice shared regularly. If you have a healthy Exchange 2010+ organization today, then you almost certainly have everything you need and will not need to licence Hybrid Servers.

When you do need a Hybrid licence

If you are running Exchange Server 2003 or 2007 you will need to add Exchange 2010 or 2013 servers if you want to perform a Hybrid migration. As those servers don’t have any Hybrid components built-in, then for many organizations it means a part-migration to a newer version of Exchange Server. Typically, this means implementing co-existence with the newer version, and migrating some client-facing services across, such as Autodiscover, Exchange Web Services, ActiveSync and Outlook Anywhere.

It’s important to note that when you add Exchange Hybrid servers to your Exchange 2003/2007 organization you cannot move any mailboxes to the servers if you wish to qualify for a “free” Exchange Hybrid licence. That means you can’t (for example) stage mailboxes from Exchange 2003 to Exchange 2010 first, before moving them to Office 365.

Another key scenario where you are likely to need a Hybrid licence is after you have completed your migration from Exchange Server 2010 to Office 365. After moving your final mailboxes and if you have them, Public Folders, you will decommission Exchange Server 2010. Most organizations will keep Azure AD Connect in place after the migration completes, which means Hybrid Identity (where AD remains the master) is in place. You will therefore require require Exchange Server to manage those attributes – and potentially to relay SMTP email, too. This of course is a great use of an Exchange 2016 or higher server.

Finally – and it comes as a surprise to some organizations – if you have never had Exchange within the organization then you might need to install Exchange Hybrid servers for attribute management within the local AD. As mentioned above – if you use Azure AD Connect, you will have Hybrid identity in place. Many organizations running Domino today and migrating to Office 365 find they need to install an Exchange Hybrid server (or two) and utilize the free Hybrid licence.

Acquiring Exchange Hybrid licences

The process to acquire an Exchange Hybrid licence has recently changed. Previously, you would request Exchange Hybrid licences from the Office 365 portal. This of course, made it easy to request the licences you needed in advance in the same way you licenced Exchange Servers traditionally within your organization.

If you are licensing new Exchange Servers for Hybrid today, the process has changed. You will now licence new Exchange Hybrid servers within the Office 365 Hybrid Wizard.

When you run the Wizard, you will be able to choose the option Licence this server now to apply the Exchange Hybrid licence:

How to license Exchange Hybrid servers

After choosing to licence the server, you’ll be provided with the option to copy product key if you need to apply the Hybrid licence key manually (for example, using the Exchange Admin Center, or PowerShell).

About the Author

Steve Goodman

Technology Writer and Chief Editor for AV Content at Practical 365, focused on Microsoft 365. A 12-time Microsoft MVP, author of several technology books and regular Microsoft conference speaker. Steve works at Advania in the UK as Field Chief Technology Officer, advising business and IT on the best way to get the most from Microsoft Cloud technology.


  1. Jiveformation

    Hi Steve,

    Great article!

    We have Exchange 2007 and a small number of users (< 50) and want to upgrade to O365. Do I need to buy an Exchange 2016 license to get the hybrid license? Can I get away without it (especially if MS is doing away with the hybrid servers soon)? I don't mind setting up a Linux SMTP relay (if that's even possible?).

  2. Walid Ibrahim

    Hi Steve,
    we are migrating from lotus notes to office 365 all mailboxes will be in office 365.
    and we have onprem AD so as in this case we will need onprem exchange to maintain exchange attribute or just the AD connect to sync the users and then we activate the license form portal

  3. Michael

    Hello Steve,

    I just came across this post while researching.

    We currently have one Exchange 2019 Server in our organization.
    Because of the fact that our partner status with Microsoft will end next year, we are currently looking for a way to move to Office 365.

    Can I setup an Exchange 2016 Server, license it with the free key, move the user to the cloud and then decommission the 2019 server?



  4. Aussupport


    We are migrate all to the O365. But we are in hybrid mode and Exchange 2010 server on-premise.

    If we set up new Exchane 2016 server in AWS, Can we license the Exchange 2016 ?


    1. Steve Goodman


      Assuming there is a connection to the domain and network, then yes – you will need a DC in the same site though. You can certainly, technically, licence the Hybrid Server using this method.

  5. Uiros

    We have 2 huge exchange server databases (1Server) , the average mailbox size is 40 to 60GB. So we would like to use some of the 365 features, but still we would like to have the mailboxes in our server, due to expected bottleneck of internet connection.
    Thanks in avance for your cooperation.

    Kind Regards

    1. Steve Goodman

      It depends on the features in Office 365 that you want to use, to be honest. If you are running Exchange 2016 or 2019, then enabling Hybrid will allow for some use of integrated features (like the Calendar in Teams). However, many organizations do move mailboxes to Office 365 and have mailboxes of 40-60GB, so it might be worth revisiting the practical side of this before dismissing it.

  6. Puly

    Hi, that’s work nice for mailbox role, but I have edge server in DMZ and this not licence this server.

    1. Steve Goodman

      Yes, this is licensing the servers using the method in the HCW.

  7. Marc

    Hi Steve,

    we just finished the Migration from our Exchange 2010 Servers to O365. Now we would replace all Servers with one Exchange 2016. Which Server Roles did we need for this Hybrid Server (there will be no Mailboxes on it, we just use it as a Relay and to manage the exchange Attributes) ?

    1. Steve Goodman

      There is only one role (apart from Edge) when installing a full Exchange Server – Mailbox, which is effectively a multi-role Exchange server that includes Hybrid.

  8. Ustadh

    Hi Steve, great article. I have a question if you would be kind enough. We have a hybrid setup on our 2013 servers with o365. We are going to migrat all mailboxes to o365 and want to add a management server 2016 in place before these are migrated and remove the 2013 hybrid servers after all mailboxes are migrated.

    Do we need to install a certificate ssl one on the 2016 server and configure EWS or autodiscover url on it to stop any outlook errors? Also assuming we need to install the mailbox role and management tools even though it’s only going to be used for smtp relay and management.

    1. Steve Goodman

      It would be advisable to migrate mailboxes before adding the management server. You would then be able to move client-facing names, like autodiscover to Office 365, making certificate management easier. It will just be the Mailbox role, which can be licenced for Hybrid.

  9. Ryan W

    Hi Steve,

    Thanks for trying to provide some clarity where Microsoft have leftmuch confusion.

    From reading your other replies I understand a hybrid key should be available for Exchange 2016 but not 2019.

    A hybrid server cannot host mailboxes but there seems to be some uncertainty on if it’s allowed to be used for mail flow.

    I am hoping to build and load balance two Exchange servers for use as on-prem to Exchange Online SMTP relays. Do you think this is allowed? Can the same key exported from the HCW be used for both servers?

    I am asking the same questions of Microsoft but I suspect you may know more than them on this 🙂

    1. Steve Goodman


      As you state the restriction is based on not being able to host mailboxes and not mail flow. It is very common to use a Hybrid Server for the purposes of SMTP relay.

      The FAQ from Microsoft states the following:

      “If you do not host any mailboxes on the servers used to connect to Microsoft 365 you can license them using the Microsoft 365 Hybrid Configuration Wizard (HCW) which you can find here.The HCW validates your Microsoft 365 subscription and installs the appropriate licenses on your servers. Note that the free Exchange Server license is not available for Exchange 2019 hybrid servers.”

      Yes the key can be used on more than one server and you can license them using the wizard.


  10. Michael Hanna

    Good Day Steve,
    Microsoft Mentioned in a lot of articles that the following rights are included with all Microsoft 365 Enterprise E3 and E5 User SLs:

    Exchange Server, SharePoint Server, Skype for Business
    • Rights to install the server software an unlimited number of times on servers dedicated to the customer’s use
    • Downgrade rights included
    • Rights to access servers licensed with Volume Licensing licenses

    I just wanted to understand how i can license the on-Prem servers?

    1. Steve Goodman

      Generally the E3 and E5 SKUs come with the CALs, not the Server Product.

      The normal expectation for Exchange Server 2019 is that you will buy Exchange Server licences via your normal Enterprise Agreement (or similar).

      For example, buying 100 E3 licences doesn’t give me rights to install 5 Exchange Servers. I would need to buy Exchange Server licences (Standard or Enterprise Edition). However, I would not need to buy associated CALs (Standard or Enterprise) like normal, as I would have them with Office 365.

      The link you posted states this –

      “Microsoft 365 E3 and E5 provide the right to access server software running on Licensed Servers or to Manage Operating System Environments for the following products: Exchange Server, SharePoint Server, Skype for Business Server, Windows Multipoint Server, Windows Server, Advanced Threat Analytics, System Center Configuration Manager, and System Center Endpoint Protection.”

      You will find the full text in the Online Service terms and conditions.

      I will add, I am not a licencing expert at Microsoft – so please confirm anything with Microsoft or your licensing vendor!

  11. JP Greyling

    Good day Steve, thank you for the article. One question I have is, we are now fully migrated to Office 365 and have an Exchange 2013 Server, which I would like to replace with Exchange 2019 using the Free Hybrid License so that we can use it as our Management Box. It will do nothing else, but when I log onto our Volume Licensing Portal, Exchange 2019 is not available for download, do I need to request this or how do I go about getting the installs for it? I think Microsoft should make it easier to obtain Exchange 2019, like a trail version which you can license for Hybrid. Your help will be much appreciated. JP

    1. Steve Goodman


      I don’t believe there is a free Hybrid licence for Exchange Server 2019 – it is only available via Volume Licensing. Therefore unless you are upgrading to Exchange Server 2019 for running an on-premises email system, Exchange 2016 is the version to go to.


  12. Timothy Waldvovgel

    I do have a question pertaining to hybrid licensing and newer versions of Exchange. I had heard that the hybrid license will cover upgrading our exchange server to the 2019 version at no additional cost providing no mail is routed through the server. The understanding I had was that no mailboxes can exist on the server. However, Im not sure if mail contacts or mail enable security groups will create a licensing problem.

    Thank you.

    1. Steve Goodman

      Mail contacts or security groups will not create a licensing issue. However the most recent you can upgrade to for Hybrid only is Exchange 2016, not 2019.

  13. Timothy Waldvovgel

    Just a heads up that the word LICENSE is misspelled many times on this page. Just as a courtesy.

    I do have a question pertaining to hybrid licensing and newer versions of Exchange. I had heard that the hybrid license will cover upgrading our exchange server to the 2019 version at no additional cost providing no mail is routed through the server. The understanding I had was that no mailboxes can exist on the server. However, Im not sure if mail contacts or mail enable security groups will create a licensing problem.

    Thank you.

    1. Steve Goodman


      It’s my understanding you cannot request a free Hybrid licence for Exchange 2019, however you can licence it via your volume licence agreement.

      I am assuming by misspelled, you are suggesting that it’s spelled incorrectly in American English, rather than British and international forms?


      1. Lee Neville

        The word “Licence” in the American idiom is used for both verb and noun contexts.

        In British or more accurately, Commonwealth/International usage, licence is the noun or the thing itself (e.g., “Hi Officer, here is my drivers licence”) while license is used to denote the verb or the state of being allowed to do something (e.g., “I have been licensed to fish these waters”).

        There are other similar cases in American idiom where verb/noun contexts have been collapsed into single form. Its not wrong per se, just a regional difference.

        Feel free to use the British/International formats, the only hassle being most word processing suites come with spell/grammar checkers configured with American dictionary as default.

  14. Dan Kyaw

    Hi Steve,

    We already have hybrid server (on-prem) which has been synchronizing successfully. we are planning to replace it with a new hybrid server which will now be located in the cloud. How do i go about licensing the new hybrid server? Also what is the best practice of dealing with existing on-prem hybrid server? all resources were migrated to the cloud a while back and this server was being used just for management purpose. Thanks.

    1. Manuel Berfelde

      Hi Dan,

      have you found a solution for this?
      I have the same question.

  15. Matt


    I have a client that is using SBS 2011 and will be getting Office 365 Business Premium licensing. We were thinking of spinning up a new server to run Exchange 2016 and then using the HCW to license the Exchange 2016 server as the Hybrid server. We would then migrate mailboxes and decommission SBS 2011. Will this work, or will SBS 2011 and / or O365 Business Premium licensing prevent it?


    1. Steve Goodman

      I believe this would work – Business Premium allows for Hybrid, but doesn’t include on-premises CALs which aren’t needed for that scenario

  16. Kevin

    Hello Steve,

    Great information here–Thanks for sharing!

    Is there a link to the Microsoft Terms of Licensing for the use of the Hybrid Key? I frequently encounter scenarios where my customer may have Exchange 2010 SP 3 (fully patched) – and as you have pointed out, is a version of Exchange that already has the hybrid functionality built in.

    As many clients understand that to remain in a “supported” configuration Microsoft recommends keeping at least one Exchange Server in the environment. The concern that is raised (especially in scenarios where EOL support is quickly approaching) could the HCW key be used as a means to remain in both a supported configuration AND with an Exchange Server version that is not “out of support”?

    If so- when running (or re-running) the HCW in an Exchange 2010 environment, would the option be presented to obtain this key (for 2016)? This remains a bit unclear and Microsoft seems a bit gray on this. (It is understood this key is for a “coexistence edition” which has limited functionality and cannot be used as a mailbox server).

    Your clarification and any supportive links would be HUGELY appreciated.

    Thank you sir!


    1. Ted

      Hi Kevin, did you find an answer to this?

  17. gman77

    we have exchange 2013 in house currently and am considering virtualizing it so it can be used for management purposes.

    if in a few years we need to upgrade exchange to a newer version, could you use this key?

    1. Steve Goodman

      My understanding of the licensing terms would be that that is acceptable, and a fairly common end-point as well.

  18. Rkast

    Nice write up. For a free key you cant have any mailboxes on the server or pf. But what if your IDM first creates a user and mailbox on-prem and then immediately move the mailbox to o365? Generatie a key when the box is empty but are you compliant and eligble?

    1. Steve Goodman

      The key will be generated regardless of whether there is a mailbox present, IIRC.

      In the above case, then it’s less about “getting the key” but ensuring you remain compliant with Microsoft licensing throughout the Exchange Server ‘s lifecycle. That might mean reconfiguring your provisioning system to stamp the new user object with the necessary attributes to make it a Remote Mailbox.

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