What is Microsoft 365 eSignature?

Microsoft 365 eSignature is Microsoft’s native way to request electronic signatures from documents stored in Microsoft 365, mainly SharePoint.

That is the simple description. The more useful one is this: it is a signing workflow built into the place where many companies already keep their working documents. A user can start a request from SharePoint or, for supported Word scenarios, from Word. The recipients sign a PDF copy. The completed PDF lands back in SharePoint.

For many teams, that is enough. For some teams, it is absolutely not enough. The trick is knowing the difference before people start using it for everything.

If you are planning a rollout, use the full Microsoft 365 eSignature guide and the tenant readiness checklist.

What happens in the PDF flow

A user opens an unencrypted PDF from a SharePoint document library, chooses the signing option, adds recipients, places signature fields and sends the request. Recipients get a notification, open the request, accept the electronic signing terms and sign.

When the request is complete, SharePoint stores the signed PDF in the same location as the original file.

That storage detail matters. It means the signed document can follow the same ownership, retention and audit thinking as the rest of the library, assuming your SharePoint governance is not already a mess.

What happens in Word

Microsoft also supports eSignature from Word desktop for eligible users and documents. The Word file must be a .docx, unencrypted and stored in a SharePoint site enabled for eSignature. Users can place eSignature fields directly in Word, then send a request.

The signer does not edit the source Word file. They sign a generated PDF copy, and the completed PDF is saved back to the SharePoint location.

This is useful for repeatable templates such as HR letters, approvals or standard agreements. It is not a full contract lifecycle system.

What kind of signature is this?

Microsoft describes the service as using simple electronic signatures.

That sentence should make legal and compliance teams pay attention. Simple electronic signatures are perfectly fine for many business processes, but they are not the answer to every regulated, high-risk or identity-sensitive scenario.

Before rollout, decide which document types are allowed and which must stay with a stronger or more specialized signing platform.

Why admins should care

This feature leans heavily on SharePoint and Microsoft Entra behavior.

The sender needs edit and sharing rights. External recipients may require Microsoft Entra B2B integration for SharePoint and OneDrive. Site sharing, unique permissions, sensitivity labels, conditional access, encryption and download restrictions can all affect whether the process works.

So yes, it is an eSignature feature. But operationally it behaves like a SharePoint governance feature. The SharePoint eSignature governance guide goes deeper on that.

Audit trail

Microsoft says eSignature activities can be searched in Microsoft Purview Audit. Useful events include request created, sent, canceled, declined, expired and completed. Recipient actions such as viewing, signing and downloading the signed document can also appear.

For Microsoft 365-heavy organizations, that is one of the better arguments for the native option.

When it is a good fit

Microsoft 365 eSignature is worth considering when:

• the document already lives in SharePoint;
• the signing flow is simple;
• simple electronic signatures are legally sufficient;
• up to 10 recipients per request is enough;
• the signed copy should stay in Microsoft 365;
• the organization wants Purview audit visibility;
• buying another signing platform would be overkill.

When I would be careful

I would be careful if the process needs advanced identity checks, heavy templates, complex routing, bulk sending, CRM integration, legal negotiation workflows or strict regulated signing requirements.

In those cases, compare it properly against Adobe Acrobat Sign and DocuSign instead of forcing every use case into the Microsoft-native tool. I covered that in Microsoft 365 eSignature vs Adobe Sign vs DocuSign.

Bottom line

Microsoft 365 eSignature is not magic and it is not a universal replacement for dedicated signing platforms.

It is a pragmatic option for simple signing workflows that already belong in Microsoft 365. Used that way, it can reduce friction. Used without boundaries, it becomes one more thing admins have to clean up later.