After forcing MFA on all Office365 users setting up an app password for Outlook was annoying to do.  After some searching I found two articles from Microsoft on how to enable modern authentication.

For Exchange:

  • To View the current setting:
    • Get-OrganizationConfig | Format-Table Name,OAuth* -Auto
  • To Change the Setting:
    • Set-OrganizationConfig -OAuth2ClientProfileEnabled $true

Once that is done you need to do the following on Outlook 2016 (2013 is covered in the link):

  • Go to this location in the registry:
    • HKEY_CURRENT_USER\Software\Microsoft\Exchange
  • Add DWORD (32bit) key:
    • AlwaysUseMSOAuthForAutoDiscover
  • Change the value to be:
    • 1

Close and open Outlook and it should take the new setting.