First Step to Add a Custom Domain to a Microsoft 365 Tenant
An administrator wants to add a custom domain 'contoso.com' to a new Microsoft 365 tenant. The domain is already registered and available. What is the first step the administrator should perform in the Microsoft 365 admin center?
Quick Answer
The answer is to add the domain and verify ownership by creating a TXT record. This is the mandatory first step because Microsoft 365 requires proof that you control the domain before any services—such as email routing or SharePoint Online—can be provisioned; the TXT record acts as a cryptographic handshake between your DNS host and Microsoft’s directory. On the MS-102 exam, this question tests your understanding of the domain onboarding workflow, and a common trap is assuming you can skip verification or start configuring services like Exchange immediately. Remember that verification via TXT is always the gatekeeper—no TXT, no services. A useful memory tip is “TXT first, services next,” reinforcing that the DNS text record must be added and confirmed before any other domain setup proceeds.
⚠ Common exam trap
Watch out — candidates often think MX record configuration is the first step because they associate domains primarily with email, but Microsoft 365 requires ownership verification via TXT record before any service-specific DNS changes are allowed.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Add the domain and verify ownership by creating a TXT record
The first step when adding a custom domain to a Microsoft 365 tenant is to add the domain in the admin center and then verify ownership by creating a TXT record in the domain's DNS zone. This proves you control the domain before any services (like email or SharePoint) can be configured. Without verification, Microsoft 365 will not allow further domain-related setup.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
Add the domain and verify ownership by creating a TXT record
Why this is correct
Correct. Domain verification is required before using the domain for services.
- ✗
Create user accounts with the new domain
Why it's wrong here
User accounts cannot be created with the domain until it is verified.
- ✗
Configure email routing with MX records
Why it's wrong here
MX records are configured after domain verification to route email to Exchange Online.
- ✗
Set up SharePoint Online with the new domain
Why it's wrong here
SharePoint Online uses the tenant domain; custom domain setup comes after verification.
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Microsoft 365 Tenant Setup
Key term
Microsoft 365 tenant
A Microsoft 365 tenant is a dedicated, isolated instance of Microsoft 365 services created for an organization when they sign up for a subscription.
Key term
Microsoft 365
Microsoft 365 is a subscription-based cloud service from Microsoft that combines productivity tools like Office apps with security, device management, and online storage.
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Same concept, more angles
4 more ways this is tested on MS-102
These questions test the same concept from different angles. Work through them to make sure you can recognise it however the exam phrases it.
Variation 1. An administrator wants to add a second custom domain, 'contoso-europe.com', to their existing Microsoft 365 tenant. The domain 'contoso.com' is already verified. What is the first step the administrator should take?
easy- ✓ A.Add the domain in the Microsoft 365 admin center
- B.Create a DNS TXT verification record
- C.Update the UPN suffixes for users
- D.Create a new Microsoft 365 tenant
Why A: To add a new domain, the administrator must first add it in the Microsoft 365 admin center under Setup > Domains. After adding it, verification steps (like adding a TXT record) are required. Updating UPN suffixes is done after verification. Creating a new tenant is unnecessary.
Variation 2. An administrator needs to add a custom domain 'contoso.org' to their Microsoft 365 tenant. They have already purchased the domain and have access to the DNS registrar. What is the first step the administrator should perform in the Microsoft 365 admin center?
easy- A.Add a TXT record in the public DNS zone
- ✓ B.Add the domain in the Microsoft 365 admin center
- C.Configure email routing (MX record)
- D.Create user accounts with the new domain
Why B: The first step to add a custom domain to a Microsoft 365 tenant is to initiate the domain addition process in the Microsoft 365 admin center. This triggers Microsoft to generate the unique verification TXT record that must be published in the public DNS zone. Without first adding the domain in the admin center, the administrator would not know the specific verification string required for the TXT record.
Variation 3. An administrator is onboarding a new custom domain for email in a Microsoft 365 tenant. Which step should be performed first?
easy- ✓ A.Add the domain in the Microsoft 365 admin center
- B.Verify domain ownership by adding a TXT record
- C.Configure DNS records for Microsoft services
- D.Set the domain as the primary email domain
Why A: Before you can use a custom domain for email or any other service in Microsoft 365, you must first add the domain to the tenant in the Microsoft 365 admin center. This creates the domain object in Azure Active Directory and initiates the verification process. Only after the domain is added can you proceed to verify ownership and configure DNS records.
Variation 4. An administrator wants to add a custom domain 'fabrikam.com' to a new Microsoft 365 tenant. What is the first step the administrator should perform?
easy- ✓ A.Add the domain in the Microsoft 365 admin center.
- B.Create an SPF record for the domain.
- C.Create a MX record pointing to Exchange Online.
- D.Assign Microsoft 365 licenses to users with @fabrikam.com addresses.
Why A: The first step to add a custom domain to a Microsoft 365 tenant is to add the domain in the Microsoft 365 admin center. This initiates the domain verification process, where Microsoft provides a TXT record that the administrator must add to the domain's DNS hosting provider to prove ownership. Without completing this verification step, no other domain-related configurations (such as SPF, MX records, or user licensing) can proceed.
JA
Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
This MS-102 practice question is part of Courseiva's free Microsoft certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the MS-102 exam.