Microsoft Entra ID vs Active Directory: What is the Difference?
Microsoft Entra ID and Active Directory are both Microsoft identity services, but they solve different problems. Learn the key differences and how they connect in hybrid environments.
Microsoft Entra ID vs Active Directory: What is the Difference?
Quick Definition
- Active Directory (AD) — Microsoft's on-premises directory and authentication service for Windows networks, using Kerberos, NTLM, and LDAP.
- Microsoft Entra ID (formerly Microsoft Entra ID (formerly Azure AD)) — Microsoft's cloud-based identity service for Microsoft 365, Azure, and SaaS, using OAuth 2.0, OpenID Connect, and SAML.
They share branding ("Active Directory" in the name) but are fundamentally different products designed for different problems.
In simple terms:
AD authenticates Windows users to file shares; Entra ID authenticates anyone to web apps. They overlap less than the names suggest.
Why the Comparison Matters
- Most enterprises run both — AD for Windows and Entra ID for cloud.
- They are commonly connected via Entra Connect (formerly Microsoft Entra ID Connect).
- Compromise in one often cascades to the other if poorly secured.
- Understanding the differences is essential for hybrid identity design and security.
Side-by-Side Comparison
| Aspect | Active Directory | Microsoft Entra ID |
|---|---|---|
| Deployment | On-premises | Cloud (SaaS) |
| Authentication protocols | Kerberos, NTLM | OAuth 2.0, OIDC, SAML, WS-Fed |
| Directory protocol | LDAP | Microsoft Graph API, OData |
| Objects | Users, Computers, Groups, OUs, GPOs | Users, Groups, Apps, Service Principals, Devices |
| Group Policy | Yes | No (use Intune for policy) |
| Schema | Extensible | Fixed by Microsoft |
| Trusts | Domain / Forest trusts | B2B / B2C federation |
| Privileged groups | Domain Admins, Enterprise Admins | Global Admin, Privileged Role Admin |
| Domain joining | Yes (Domain Join) | Entra Join, Hybrid Join |
| Federation | Via ADFS | Built-in OIDC / SAML |
| MFA | Add-on (e.g., Azure MFA, third-party) | Built-in |
| Conditional access | No (third-party needed) | Built-in |
| Privileged Identity Management | No (third-party PAM) | Built-in (PIM) |
| Identity Protection | Limited; requires Microsoft Defender for Identity | Built-in |
| Cost model | Server licenses + CALs | Per-user subscription (M365/EMS) |
Object Differences
Active Directory Objects
- User — username, password hash, group memberships, attributes.
- Computer — domain-joined machines.
- Group — security or distribution.
- OU — Organizational Unit, container for delegation.
- GPO — policy applied via SYSVOL/AD.
- Trusts — between domains and forests.
Entra ID Objects
- User — cloud-only, synced, or guest.
- Group — security, M365, dynamic.
- Device — registered, joined, hybrid joined.
- App Registration — application definition (you own).
- Enterprise Application / Service Principal — application instance in your tenant.
- Managed Identity — Azure-managed service principal.
- Conditional Access policy — context-aware access rules.
Authentication Flow Differences
AD (Kerberos)
- User logs into Windows.
- Workstation gets TGT from DC via AS-REQ/AS-REP.
- For each service, requests TGS from KDC.
- Presents TGS to service for authentication.
Entra ID (OAuth 2.0 / OIDC)
- User opens app, redirected to log in.microsoftonline.com.
- Enters credentials, completes MFA, satisfies Conditional Access.
- Receives ID token + access token + refresh token.
- App accepts the access token to authorize API calls.
How They Connect: Hybrid Identity
Entra Connect (Password Hash Sync / PTA / Federation)
- Password Hash Sync (PHS) — hash of NTLM hash synced to Entra ID.
- Pass-Through Authentication (PTA) — Entra ID forwards auth to on-premises agents.
- Federation (ADFS) — Entra ID redirects to ADFS for authentication.
Hybrid Join
Devices joined to AD and registered in Entra ID, allowing single SSO.
Cloud Kerberos Trust
Modern hybrid scenario where Entra ID issues Kerberos tickets accepted by on-premises AD.
Entra ID Connect Sync
Synchronizes users, groups, and (optionally) device objects.
Security Implications of the Differences
AD Risks
- Kerberoasting, AS-REP Roasting, DCSync, Golden Ticket, Pass-the-Hash, AD CS abuses, unconstrained delegation.
Entra ID Risks
- Application consent phishing, OAuth abuse, federation token forgery, risky service principals, Conditional Access gaps, Global Admin overuse, MFA fatigue, refresh token theft.
Hybrid Risks
- AD compromise → Entra Connect service account → DCSync + Global Admin.
- Federation compromise (ADFS) → Golden SAML.
- Synced privileged accounts → on-premises compromise crosses to cloud.
When to Use Which
- AD — Windows endpoints, file shares, internal apps using Kerberos/NTLM, Group Policy needs.
- Entra ID — SaaS, Microsoft 365, Azure, modern web apps, mobile devices.
- Both (hybrid) — typical enterprise reality.
Many organizations are gradually reducing AD dependence by:
- Joining devices directly to Entra ID with Intune.
- Replacing on-premises apps with SaaS.
- Migrating file shares to OneDrive/SharePoint.
- Adopting Cloud Kerberos Trust.
But few are fully AD-free.
Hybrid Hardening Best Practices
- Treat Entra Connect server as Tier 0.
- Vault MSOL_ account with strong protections.
- Don't sync privileged AD accounts to Entra (or sync without their privileges).
- Use cloud-native admin accounts for Entra ID admin work.
- Enable strong Conditional Access for synced privileged users.
- Audit federation trust (ADFS) for Golden SAML risk.
- Monitor sync changes and unusual Entra Connect activity.
- Apply tiered admin model consistently across AD and Entra.
How Forestall Helps
Forestall builds a unified identity graph across AD and Entra ID:
- Tracks synced identities and their privileges in both environments.
- Maps attack paths that cross from on-premises AD to Entra ID and back.
- Surfaces hybrid sync risks and federation issues.
- Highlights privileged accounts visible in both planes.
- Tracks remediation across both environments.
Frequently Asked Questions
Should I move everything from AD to Entra ID?
For greenfield environments, often yes. For established enterprises, the migration is multi-year and often partial. Many organizations end up hybrid permanently.
Is Entra Domain Services (Entra DS) the same as AD in the cloud?
Entra DS provides AD-like services (Kerberos, LDAP, GPO subset) hosted by Microsoft for legacy app compatibility. It's distinct from Entra ID itself.
Can I have Entra ID without AD?
Yes — many cloud-first companies use Entra ID alone with Intune for device management.
Are Group Policies usable in Entra ID?
No — Entra ID uses Intune for device policy. Some on-premises GPO equivalents are available as Intune settings catalog items.
What about Cloud Kerberos Trust?
It lets Entra-only-joined devices authenticate to on-premises AD-Kerberos services without on-premises AD passwords. Useful for hybrid organizations reducing AD dependence.
Conclusion
Active Directory and Microsoft Entra ID share branding but solve different problems with different protocols and security models. In hybrid environments — which is most enterprises today — both must be hardened, and the connections between them must be modeled carefully. Compromise in either can cascade; mature security programs build a unified view of identity risk across both, reduce standing privilege in both, and keep the hybrid plumbing as a Tier 0 concern.
See identity risk across both AD and Entra ID.
Forestall maps the hybrid identity graph — including paths from on-premises AD into your Entra ID tenant.