How to Choose the Right Group Type in Microsoft 365

Using the wrong group type in Microsoft 365 creates unavoidable complexity over time. What starts as a simple setup often turns into increased administrative overhead, permission sprawl, duplicate groups, and email misrouting. So, choosing the right group type early is essential for scalable collaboration, clear communication, and strong access governance.

A clear understanding of Microsoft 365 group vs Distribution lists, Microsoft 365 group vs Security group; enables admins to make informed decisions based on specific requirements. This guide breaks down each group type with clear explanations, real-world use cases, and comparison table, making it easy to choose the right group and avoid long-term management headaches.

Microsoft 365 offers six distinct group types, each designed for a specific purpose, ranging from teamwork and email communication to security and access control.

1. Microsoft 365 groups
2. Distribution groups
3. Security groups
4. Mail-enabled security groups
5. Dynamic distribution groups
6. Shared mailboxes

All group types in Microsoft 365 do not serve the same purpose. The sections below break down each group type to help you understand when and why to use them.

Microsoft 365 Groups are basically the default and recommended group for team collaboration. These groups provide a comprehensive suite of shared resources that facilitate seamless teamwork both within and outside your organization.

When you create a Microsoft 365 Group, members automatically gain access to a group inbox, calendar, document library, and workspace files. These groups can be created with or without Microsoft Teams integration, and teams can be added later if needed. A key advantage is that users can subscribe to group conversations, choosing whether to receive emails directly in their inbox.

Also, Microsoft 365 Groups support dynamic membership through Microsoft Entra ID, allowing automatic addition or removal of members based on user attributes like department, location, or title. They can also be configured as role-assignable groups in Entra ID to inherit role permissions.

When to Use Microsoft 365 Groups?

The following scenarios indicate when Microsoft 365 Groups can add real value.

• Team members need a shared workspace for files, conversations, and calendar events.
• You want to integrate with Microsoft Teams for enhanced collaboration.
• External partners or clients need to collaborate with your team.
• Project teams require a centralized hub for all collaboration activities.
  

Tip: If you are confused on choosing group types, Microsoft’s recommended default group type is Microsoft 365 Groups.

Distribution groups are commonly used to send announcements or policy updates to a fixed set of recipients. They are intended only for email communication and do not provide collaboration features such as shared files, calendars, or Teams workspaces.

All members automatically receive messages sent to the group, which makes distribution groups suitable for mandatory communications. Distribution groups can be used in Microsoft Teams, but only individual users are added to Teams. The group itself is not recognized as a Teams entity.

Notable limitations are that the membership of a distribution group cannot be viewed in the Outlook mobile application, and DLs do not support dynamic memberships.

When to Use Distribution Groups?

The following scenarios highlight when Distribution lists are most effective.

• You need to send announcements to a specific set of people.
• Sending critical notifications (outages, policy updates, incidents) to a defined set of recipients.
• Emergency alerts or important updates to priority accounts.
• Simple mailing lists for newsletters or regular updates.

Note: DLs can be upgraded to Microsoft 365 groups, when you anticipate needing collaboration features in the future.

Security groups are fundamentally different from other group types as they focus solely on access management rather than communication. These groups contain no email functionality or collaborative tools. Their purpose is to grant access to resources like SharePoint sites, Azure resources, or other Microsoft 365 services.

Security groups serve as role-assignable groups by allowing administrators to assign permissions to the group rather than individual users. When someone is removed from the security group, their access to all associated resources is automatically revoked. Security groups can contain both users and devices, especially useful with mobile device management services like Microsoft Intune.

Proper naming conventions are critical for security groups. Security groups support dynamic membership in Microsoft Entra ID and can be added to Microsoft Teams.

When to Use Security Groups?

Here are the scenarios where creating security groups is the right choice.

• Managing who can access resources like SharePoint sites or document libraries.
• Controlling permissions for Azure resources.
• Managing devices with Microsoft Intune, as only security groups support device membership.
• Implementing role-based access control across multiple resources.
• Automating access provisioning based on employee attributes (with dynamic membership).

Important: At present, Microsoft supports restoration only for Microsoft 365 Groups and Security Groups.

Mail-enabled security groups combine the access management capabilities of security groups with email functionality. These groups are perfect when you need to both grant access to resources and communicate with the members who have that access.

If you compare security vs mail-enabled security groups, mail-enabled security groups cannot be dynamically managed through Microsoft Entra ID and cannot contain devices; they are limited to user accounts only. However, they retain the core benefit of centralized access management while adding the convenience of group email communication.

Mail-enabled security groups can be added to Microsoft Teams and are useful for scenarios where resource access and team communication overlap.

When to Use Mail-Enabled Security Groups?

Below are common use cases where mail-enabled security groups are a good fit.

• Coordinating alerts for IT or security operations where members need both access and messaging.
• Managing project resource access with email notifications about project changes.
• Controlling access to sensitive applications and communicating policy updates.
• Compliance teams needing access to eDiscovery cases or audit logs while receiving regulatory updates and alerts.

When comparing dynamic distribution list vs distribution list, the key difference is flexibility. A standard distribution list has a fixed set of members, while a dynamic distribution list calculates membership dynamically each time a message is sent. Instead of maintaining a static list of members, these groups use filters and conditions defined in the Exchange admin center to determine group memberships.

When an email is sent to a dynamic distribution group, it’s delivered to all recipients (group members) who match the specified criteria at that moment. This ensures that messages always reach the right audience based on current organizational data, such as department, location, job title, or other attributes.

This dynamic approach eliminates the need for manual membership updates as people join, leave, or change roles within the organization.

When to Use Dynamic Distribution Groups?

Use dynamic distribution groups in the following situations.

• Sending targeted HR communications based on employee attributes (tenure, department, employment type).
• Delivering office-specific announcements without manually maintaining membership.
• Organizational updates to all employees where the membership changes frequently due to hiring or transfers.
• Eliminating the administrative burden of updating large distribution list membership.

Shared mailboxes are designed for scenarios where multiple people need to access and manage the same email address.

A significant advantage of shared mailboxes is that they don’t consume an Exchange Online license, making them a cost-effective solution for shared email management. Shared mailboxes can receive external emails when enabled by administrators.

In a shared mailboxes vs Microsoft 365 groups comparison, shared mailboxes are focused on email and calendar access only. Microsoft 365 Groups, on the other hand, offer a complete collaboration environment with Teams, SharePoint, and Planner. However, it’s important to note that shared mailboxes cannot be migrated to Microsoft 365 Groups.

When to Use Shared Mailboxes?

Consider creating shared mailboxes in the following scenarios.

• Handling role-based email that requires collective management (info@, sales@, hr@).
• When mailboxes should receive external emails from vendors.
• Managing a shared calendar for room bookings or equipment scheduling.
• Collaborating on customer support or service requests where multiple team members need visibility.

Tip: Now that you understand all each group type in Microsoft 365, it’s important to take a look at existing groups and verify that users have the right access. Use this PowerShell script to export Microsoft 365 group report. It produces two CSV files: one with all group details, and one with full membership.

Since group creation is spread across multiple admin centers and tools, administrators often face uncertainty about the right place and method to create each group type. This overlap is a common source of confusion, especially for new Microsoft 365 admins.

• Microsoft 365 Admin Center: Use this for Microsoft 365 Groups, Distribution Lists, Security Groups, and Mail-enabled Security Groups. Required roles: Global Administrator, Groups Administrator, or User Administrator.

• Exchange Admin Center: Primarily used for creating Distribution Groups and Dynamic Distribution Groups but also supports Microsoft 365 Groups and Mail-enabled Security Groups from an email perspective. Required roles: Exchange Administrator or Global Administrator.

• Microsoft Entra Admin Center: Best suited for managing dynamic membershipin Security Groups and Microsoft 365 Groups, including attribute-based rules and role-assignable access. Required roles: Global Administrator or Groups Administrator; Privileged Role Administrator for role-assignable groups.

• PowerShell: Offers maximum flexibility to create, manage, and automate all group types, including bulk actions like creation, restoration, and so on. Required roles for Microsoft 365 Groups and Security Groups: Global Administrator or Groups Administrator.

Understanding which portal to use improves efficiency and gives administrators greater control over group lifecycle management.

Use this table to quickly compare features, capabilities, and administrative options across all Microsoft 365 group types.

I hope this guide makes it easier for you to pick the right group type in Microsoft 365. Knowing the differences helps admins save time, manage access more effectively, and keep collaboration running smoothly. Feel free to reach out if you have any questions.