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Introduction:
For years, Azure Files’ SMB protocol required a hybrid identity bridge – either on-premises Active Directory or Azure AD Domain Services – creating a major obstacle to fully cloud-native storage. With the general availability of Entra-Only identities for Azure Files SMB, Microsoft has eliminated the last dependency on traditional domain controllers, allowing cloud-only Entra ID to issue Kerberos tickets directly while preserving SMB compatibility, NTFS permissions, and FSLogix support for Azure Virtual Desktop.
Learning Objectives:
- Understand how Entra-Only identities replace hybrid AD for Azure Files SMB authentication using Kerberos and OAuth tokens.
- Learn to configure cloud-native file shares, manage NTFS permissions via Azure portal, and integrate FSLogix containers without domain-joined clients.
- Implement security best practices including Managed Identities, conditional access policies, and cross-platform access (Windows, Linux, macOS preview).
You Should Know:
- Enabling Entra-Only Authentication on an Azure File Share
This step eliminates the need for any on-premises AD or Entra Domain Services. The share will accept Kerberos tickets issued directly by Entra ID for cloud-only user identities.
Step‑by‑step guide:
- In Azure portal, navigate to your Storage account → File shares.
- Select an existing share or create a new one.
- Under “Authentication”, choose “Entra ID (formerly Azure AD)” as the identity source.
- Ensure “Enable Entra ID authentication for SMB” is checked.
- For “Account type”, select “Entra-Only” (not hybrid or AD DS).
- Save the configuration. The share now accepts Entra-Only identities.
Verification commands (Windows):
Mount the share as a cloud-only user (without domain-joined machine):
Map drive using Entra ID credentials (requires Azure Files SMB with Kerberos) net use Z: \<storage-account>.file.core.windows.net\<share-name> /user:AzureAD\<a href="mailto:user@tenant.com">user@tenant.com</a>
Or using PowerShell with explicit credential object:
$cred = Get-Credential -UserName "AzureAD\[email protected]" New-PSDrive -Name Z -PSProvider FileSystem -Root "\<storage-account>.file.core.windows.net\<share-name>" -Credential $cred -Persist
2. Managing NTFS Permissions Without Domain-Joined Clients
Traditional NTFS ACLs required a domain-joined Windows machine running Server Manager. Now, permissions can be assigned directly from the Azure portal or via Azure CLI, using Entra ID group objects.
Step‑by‑step guide:
- In the file share overview, click “Access Control (IAM)”.
- Add role assignment for “Storage File Data SMB Share Contributor” or “Reader” to Entra ID users/groups.
- For granular NTFS-level permissions (not just share-level), use Azure Storage Explorer (version 1.20+).
- Download Storage Explorer, sign in with Entra ID account.
- Navigate to the file share → right-click a folder/file → “Properties” → “Security”.
- Add or remove Entra ID users/groups and set permissions (Read, Write, Modify, Full Control).
Linux alternative (using mount.cifs with Kerberos):
Install cifs-utils and krb5 sudo apt install cifs-utils krb5-user -y Obtain Kerberos ticket for Entra ID user (requires AzureAD joined Linux or device-registered) kinit [email protected] Mount the share sudo mount -t cifs //<storage-account>.file.core.windows.net/<share-name> /mnt/azurefiles -o sec=krb5,uid=$(id -u),gid=$(id -g)
- Configuring FSLogix Containers for AVD with Entra-Only Identities
FSLogix profile containers in Azure Virtual Desktop can now use Entra-Only authenticated file shares, removing the need for hybrid domain join.
Step‑by‑step guide:
- Deploy an AVD session host (Windows 10/11 multi-session) and register it with Entra ID only (not hybrid joined).
- Install FSLogix agent (latest version that supports Entra-Only SMB).
- Create a registry key on the session host:
reg add "HKLM\SOFTWARE\FSLogix\Profiles" /v VHDLocations /t REG_MULTI_SZ /d "\<storage-account>.file.core.windows.net\<share-name>" /f reg add "HKLM\SOFTWARE\FSLogix\Profiles" /v Enabled /t REG_DWORD /d 1 /f
- Ensure the session host’s managed identity or the AVD host pool’s service principal has “Storage File Data SMB Share Contributor” role on the Azure Files share.
- Reboot the session host. Users signing in via AVD will get FSLogix profiles stored on the Entra-authenticated share.
- Using Managed Identities for Application Access (OAuth Tokens)
Applications and Azure services can now access Azure Files using OAuth 2.0 tokens from Managed Identities, eliminating shared access keys or connection strings.
Step‑by‑step guide:
- Enable system-assigned managed identity on your Azure VM, Azure Function, or AKS cluster.
- Assign the identity the role “Storage File Data Privileged Contributor” or “Reader” on the storage account.
- For an Azure VM running Windows, access the share using Azure.Identity SDK:
// C example using Azure.Identity var credential = new DefaultAzureCredential(); var fileUri = new Uri("https://<storage-account>.file.core.windows.net/<share-name>"); var shareClient = new ShareClient(fileUri, credential); - For Linux VM, use Azure CLI token:
Acquire token via managed identity token=$(curl 'http://169.254.169.254/metadata/identity/oauth2/token?api-version=2018-02-01&resource=https://storage.azure.com' -H Metadata:true | jq -r .access_token) Mount using mount.cifs with the token (requires custom script)
5. Cross-Platform Access: Windows, Linux, and macOS Preview
Entra-Only identities work natively on Windows 11 22H2+ (Entra joined or registered). Linux clients need Kerberos configuration, and macOS is in limited preview.
Step‑by‑step for Linux:
- Join the Linux machine to Entra ID using `az connectedmachine` or `entra-id-linux-join` (preview).
- Configure `/etc/krb5.conf` to use your Entra ID domain:
[bash] default_realm = TENANT.COM [bash] TENANT.COM = { kdc = login.microsoftonline.com:88 admin_server = login.microsoftonline.com:464 } - Run `kinit [email protected]` and enter password (or use device flow).
- Mount as shown in section 2.
Step‑by‑step for macOS preview:
- Enroll in the limited preview via Azure portal → Feature registration.
- Install the Entra SMB kernel extension (provided by Microsoft).
- Mount using Finder → Connect to Server → `smb://
.file.core.windows.net/ ` → Choose “Registered User” → Enter “AzureAD\[email protected]” and password.
- Hardening and Zero Trust Security for Entra-Only SMB
Moving to cloud-native identities requires adjusting your security posture. Restrict access using network policies, conditional access, and encryption.
Hardening checklist:
- Enable SMB 3.0+ encryption (forced by default on Azure Files).
- Use Conditional Access policies in Entra ID to require compliant devices or MFA before issuing Kerberos tickets.
- Configure storage firewall to allow access only from specific VNets, IP ranges, or Private Endpoints.
- Disable shared key access for the storage account (set
AllowSharedKeyAccess = false). - Enable diagnostic logs for SMB authentication events:
Azure CLI to enable logging az storage account diagnostic-settings create --name "smb-auth-logs" --storage-account <account> --logs '[{"category":"StorageRead","enabled":true},{"category":"StorageWrite","enabled":true}]'
What Undercode Say:
- Key Takeaway 1: Removing hybrid AD dependency for Azure Files SMB reduces attack surface by eliminating domain controller replication, NTLM fallback, and on-prem credential exposure. This is a definitive step toward Zero Trust where identity is the control plane, not the network.
- Key Takeaway 2: FSLogix with Entra-Only identities unlocks true cloud-native AVD. Organizations no longer need to maintain a hybrid join just for profile containers – this cuts operational cost and allows ephemeral desktops without golden images tied to AD.
- Analysis (10 lines):
This GA announcement is not just a feature update; it’s a strategic signal that Microsoft is willing to break legacy compatibility to drive cloud adoption. The most immediate impact will be on mid-sized enterprises that ran hybrid AD solely for file shares – they can now decommission on-prem domain controllers, saving hardware and helpdesk overhead. However, caution is needed: Kerberos ticket issuance from Entra ID still relies on Microsoft’s cloud infrastructure, so availability of Entra ID becomes critical. Organizations should implement multi-region redundancy and monitor Entra ID health. From a security perspective, admins must adapt to conditional access policies for file access – a welcome shift from legacy share-level permissions. Also, macOS preview indicates Microsoft is finally addressing cross-platform enterprise clients, though Linux support via Kerberos remains less polished. The ability to manage NTFS ACLs without domain-joined machines closes a major gap for IT admins who have moved to cloud-native workstations. On the offensive side, red teams should note that credential dumping from LSASS on a domain-joined client is no longer a viable path to Azure Files – they would need to compromise an Entra ID token instead. Expect to see new attack techniques targeting OAuth token extraction from managed identities. Overall, this is a net win for cloud security, but the learning curve for legacy AD admins will be steep.
Prediction:
Within 18 months, most Azure Files deployments will be Entra-Only, and on-prem AD will become an exception rather than the norm for file services. This will accelerate the decline of hybrid identity tools like Azure AD Connect, replaced by cloud-native identity governance. However, we will also see a rise in “Kerberos phishing” attacks where adversaries trick users into providing Entra ID credentials for SMB mounts, prompting Microsoft to introduce token-binding and hardware-backed conditional access for file shares. The macOS preview will likely GA within six months, triggering a wave of cross-platform zero-trust file access solutions that compete with traditional VPN-based NAS systems. Ultimately, this change redefines the enterprise file server as an identity-aware cloud service, not a network-accessible drive – a paradigm shift that will force every SIEM and EDR to ingest Entra ID sign-in logs as the primary source of file access telemetry.
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IT/Security Reporter URL:
Reported By: Edsarney Microsoft365 – Hackers Feeds
Extra Hub: Undercode MoN
Basic Verification: Pass ✅
