Microsoft 365

Entra ID vs Active Directory

How Microsoft Entra ID differs from on-premises Active Directory, what still depends on a domain controller, and how to evaluate eliminating one.

Reviewed 2026-08-01 by the Machina IT engineering team.

The short answer

Active Directory is the on-premises directory that authenticates domain-joined machines and applies group policy inside a network. Entra ID is Microsoft's cloud identity service that authenticates users to Microsoft 365 and connected apps and enforces MFA and Conditional Access. They solve overlapping but different problems, and many environments run both.

01

What still needs a domain controller

  • Legacy applications that authenticate via Kerberos or NTLM
  • On-premises file shares relying on domain permissions
  • Print servers and older network devices
  • Machine-level group policy on domain-joined equipment
  • Line-of-business software with hard domain requirements
  • Manufacturing or lab equipment tied to a domain account
02

How to evaluate removing it

Inventory every dependency, not the obvious ones. Then decide per dependency: migrate the workload to cloud, replace the application, or keep a minimal on-premises footprint for that specific need.

Cloud-native identity with Intune-managed devices is a strong destination, but arriving there by disabling a domain controller and finding out what breaks is an expensive method.

Common mistakes

What goes wrong most often.

  • Assuming Entra ID join and domain join are the same thing
  • Overlooking equipment and printers tied to the domain
  • Decommissioning before file and app dependencies are migrated

Common questions

Straight answers, no sales theater.

Can Entra ID replace a domain controller?

For many modern, cloud-first environments, yes. For environments with legacy apps, on-premises file services or domain-tied equipment, only after those dependencies are handled.

What is Entra Domain Services?

A managed cloud service that provides domain-style authentication without running your own controllers — useful for specific legacy dependencies.

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