A Microsoft 365 Copilot license is an add-on, so each user also needs an eligible base licence such as Microsoft 365 E3, E5 or Business Standard, plus a Microsoft Entra ID work account. The exception is Microsoft 365 E7, which includes Copilot, as of October 2026.
The Copilot licence on its own does nothing. Here's which base licences qualify, everything else a user needs before Copilot shows up, and how to assign it.
One naming note first. Microsoft has renamed Microsoft 365 Copilot to Microsoft Copilot, and Microsoft 365 Copilot Chat is now Microsoft Copilot Chat. The app address is changing to copilot.cloud.microsoft. Most people still search for the old names, and the licensing is the same under either.
Which base licences can carry Copilot
Microsoft sells Copilot with Microsoft 365 E7, or as an add-on for eligible commercial, US Government and education plans. Here are the families as of October 2026:
| Family | Eligible base plans |
|---|---|
| Copilot Business (up to 300 users) | Business Premium, Business Standard, Business Basic, Apps for Business, Teams Essentials |
| Microsoft 365 | E7 (includes Copilot), E5, E3, F1, F3, Business Premium, Business Standard, Business Basic, Apps for Enterprise, Apps for Business |
| Office 365 | E5, E3, E1, F3 |
| Teams | Enterprise, EEA, Essentials |
| Single services | Exchange Online Plan 2, Plan 1 and Kiosk; SharePoint Plan 2, Plan 1 and Kiosk; OneDrive for work or school Plan 2 and Plan 1 |
| Planner, Project, Visio and Clipchamp | Planner and Project Plan 5 and Plan 3, Planner Plan 1, Visio Plan 2 and Plan 1, Microsoft Clipchamp |
| US Government (GCC, GCC High, DoD) | Microsoft 365 G5, G3, F1; Office 365 G5, G3, G1, F3; Exchange Online Plan 2, Plan 1, Kiosk; SharePoint Plan 2, Plan 1; OneDrive for Business Plan 2, Plan 1 |
The surprise for most people is how far down the list goes. Someone with only an Exchange Online Kiosk licence, or Microsoft Clipchamp, is on an eligible base. Microsoft still says to confirm eligibility in its Product Terms, the service description and the pricing page before you buy or assign anything.
Copilot Business or the enterprise route
Copilot Business is the add-on for organisations with up to 300 users on eligible Microsoft 365 Business licences. It's sold on an annual commitment and capped at 300 licensed users per tenant, and larger organisations use the enterprise licensing options instead. My guide to Copilot Business and the 300-user cap goes through that route step by step. I keep the figures for every plan on a separate page: what Microsoft 365 Copilot costs.
The requirement checklist
A licence gets Copilot assigned. These get it working. Microsoft's requirements list, as of October 2026:
| Requirement | What it means |
|---|---|
| Eligible base licence | One of the plans in the table above |
| Copilot licence | The add-on itself, or E7 |
| Microsoft Entra ID account | A work or school account, not a personal one |
| Exchange Online mailbox | Needed for mailbox-grounded features |
| Supported apps | Microsoft 365 Apps deployed for Copilot on the desktop |
| Supported browser and cookies | Edge, Chrome, Firefox or Safari |
| Network access | The Copilot service can't be blocked |
Copilot Chat is different. Eligible users need the base licence and an Entra ID account, but not a Copilot licence.
Mailboxes, apps and Teams calls
Primary mailboxes need to be hosted in Exchange Online. Copilot can also use archive, shared and delegate mailbox content a user has access to, but it doesn't work in group mailboxes. If your team runs on a shared group inbox, that's worth knowing before you promise anyone email summaries.
On the apps side, Microsoft 365 Apps must be deployed for Copilot to work on the desktop, and some features need OneDrive. Teams needs transcription or recording switched on for the post-meeting recap. For calls, a Copilot licence covers VoIP calls, while PSTN calls need a Teams Phone licence, a calling plan and a Copilot licence. Loop and Whiteboard have to be enabled for the tenant too.
Browser and network settings
Copilot in Word, Excel and PowerPoint for the web needs third-party cookies enabled, and the safelinks.protection.outlook.com domain and its subdomains should be allowed so link checks work. On the network, allow *.cloud.microsoft in full. Microsoft doesn't support allowing only selected addresses inside it. Then check that your proxy, firewall, tenant restrictions and Conditional Access policies aren't blocking copilot.cloud.microsoft.
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How to assign Copilot licences
- Check which base licence each user holds and match it against the eligible families.
- Confirm each user has a Microsoft Entra ID work or school account and, for mailbox features, an Exchange Online mailbox.
- Confirm eligibility in Microsoft's Product Terms, service description and pricing page.
- Buy Copilot, either Copilot Business for up to 300 users or the enterprise add-on.
- Assign the licences to users in the Microsoft 365 admin center.
- Give whoever runs Copilot the AI Administrator role, which covers Copilot and AI administration without Global Administrator.
- Deploy Microsoft 365 Apps, enable Loop and Whiteboard, and allow *.cloud.microsoft on the network.
Two traps that stop Copilot working
The first is device-based licensing. Copilot isn't available with device-based licensing for Microsoft 365 Apps for enterprise, so shared machines licensed per device won't get it. The second is group mailboxes, which Copilot can't use at all.
My advice before you buy
Don't buy a single Copilot seat until you've checked the base licences. Most organisations already hold one that qualifies, but the people who don't are usually the ones on shared devices or odd single-service plans. I'd run the checklist for a pilot group first, fix the network and cookie settings once, then roll out. And give the AI Administrator role to whoever owns Copilot, so you're not handing out Global Administrator to get it done.
Once the licences are sorted, the harder job is getting people to use Copilot well, and that's where I come in. I run AI training and workshops for teams, and help businesses with AI enablement, AI automation and GEO, which is about getting your business seen and cited in AI answers. Most of that work is with SaaS marketing teams, telecom companies and small businesses. Here's how we can work together.
Frequently asked questions
Do I need a Microsoft 365 licence to use Copilot?
Yes. Copilot is an add-on, so each user needs an eligible base licence such as Microsoft 365 E3, E5 or Business Standard. Microsoft 365 E7 includes Copilot.
Which licences are eligible for Microsoft 365 Copilot?
Eligible bases include Microsoft 365 E7, E5, E3, F1 and F3, the Business plans, Office 365 E5, E3, E1 and F3, Teams plans, and single services such as Exchange Online and SharePoint.
Does Copilot work with device-based licensing?
No. Copilot isn't available with device-based licensing for Microsoft 365 Apps for enterprise. Users need a work or school account in Microsoft Entra ID.
Where do I assign Copilot licences?
After purchase, you assign Copilot licences to users in the Microsoft 365 admin center.
Does Copilot Chat need a Copilot licence?
No. Eligible users need a base licence and a Microsoft Entra ID account, but not a Copilot licence, for Copilot Chat.
