# How to create an agent in Microsoft 365 Copilot, step by step

> Agent Builder lets you describe, configure or template an agent in minutes. What you can ground it on depends on your license, as Microsoft's docs state on October 31, 2026.

URL: https://claudegpt.si/news/create-an-agent-in-microsoft-365-copilot  
Published: 2026-10-31T14:51:11.118Z  
Author: ClaudeGPT Si Newsroom  
Section: Guides  
Topics: Microsoft, Microsoft 365 Copilot, Copilot Studio, AI agents  
Publisher: ClaudeGPT Si

## Key takeaways

- In Microsoft 365 Copilot, select New agent, then describe the agent, skip to configure, or start from a template.
- As of October 31, 2026, agents grounded on SharePoint data or connectors need a Microsoft 365 Copilot license or tenant pay-as-you-go billing.
- Agent Builder can't author actions that call external services, so those agents move to Copilot Studio.

To create an agent in Microsoft 365 Copilot, open the app, select **New agent**, describe what the agent should do, and select **Create**. The tool behind this is Agent Builder, and [Microsoft's Learn guide](https://learn.microsoft.com/en-us/microsoft-365/copilot/extensibility/agent-builder-build-agents) (updated October 26, 2026) describes three ways to start: natural language, manual setup, or a template.

You don't need coding skills. At the end you have a private agent that follows your instructions, can read the sources you pick, and can be shared with colleagues. What it can read depends on your license, covered below. Microsoft's docs also cover a bigger tool, Copilot Studio, for agents that call outside services.

## What you need before you start

Microsoft's [prerequisites page](https://learn.microsoft.com/en-us/microsoft-365/copilot/extensibility/prerequisites) (last updated September 30, 2026) says Microsoft 365 Copilot Chat is available to all Microsoft 365 users, and that Copilot Chat users have access to agents grounded on instructions or the web. Agents grounded on SharePoint data and Microsoft 365 Copilot connectors need either a Microsoft 365 Copilot license or a tenant with Copilot Studio pay-as-you-go billing, which is consumed as Copilot Credits.

As of October 31, 2026, the docs list this for declarative agents, the kind Agent Builder makes:

| Capability | Copilot Chat, no usage billing | Copilot Chat, usage billing | Microsoft 365 Copilot license |
| --- | --- | --- | --- |
| Custom instructions | Yes | Yes | Yes |
| Code interpreter, image generator | Yes | Yes | Yes |
| Web search as knowledge | Yes | Yes | Yes |
| SharePoint, Copilot connectors, embedded files | No | Yes | Yes |
| Email, people, Teams messages and meetings | No | No | Yes |

Microsoft notes that usage limits apply to all included features. Pay-as-you-go needs an Azure subscription and a billing policy set up in the Microsoft 365 admin center, and it isn't supported in the GCC and GCCH government clouds. The natural-language experience also depends on your Microsoft 365 language being one of the supported ones.

Your admin may also limit who can share agents. Check with them if the share options are grayed out.

## How to create an agent with natural language

Microsoft marks this as the recommended route.

1. In Microsoft 365 Copilot, select **New agent**.
2. On the **Describe** tab, say what the agent should do. For example, "Summarize my daily emails and include attachments."
3. Answer the follow-up suggestions. The name, description and instructions update as you talk. Agent Builder may also add knowledge sources by itself, such as **My emails**, and turn on the code interpreter or image generator when your request needs them.
4. To add sources yourself, select the plus sign (**+**) in the chat box.
5. Open the **Configure** tab to check what was filled in: name, description, instructions, knowledge and suggested prompts.
6. Test the agent on the **Try it** tab. Change it by asking, for instance, "Update the agent to summarize Teams chats instead of emails."
7. Select **Create**.

## How to create an agent manually

1. In Microsoft 365 Copilot, select **New agent**.
2. Select **Skip to configure**.
3. Fill in the fields on the **Configure** tab.

| Field | What to know |
| --- | --- |
| Name | Up to 30 characters |
| Description | Up to 1,000 characters. Helps the model decide when to use the agent |
| Instructions | Up to 8,000 characters. Direct the agent's tasks and how it does them |
| Knowledge | Websites, work content, embedded files, connectors |
| Starter prompts | Examples that show other users what the agent is for. No minimum |
| Icon | PNG, up to 192x192 pixels and 1 MB |

The **Model** setting sets the default response mode: **Auto** (the default), **Quick response** or **Think deeper**. Users can change it when they chat with the agent.

## How to create an agent from a template

1. Select **New agent**.
2. Under **Start with a template**, pick one. The agent is created automatically, preconfigured with a description, instructions and prompts.
3. Refine it with natural language or on the **Configure** tab, then test it on **Try it**.

Microsoft's [support page](https://support.microsoft.com/en-us/microsoft-365-copilot/build-your-own-agent-with-microsoft-365-copilot) describes the template path in the Microsoft Copilot app as: under **Agents**, select **New Agent**, pick a built-in agent, select **Configure** to customize it, and select **Create** when you're satisfied.

## Knowledge sources and their limits

Per [Microsoft's knowledge-source page](https://learn.microsoft.com/en-us/microsoft-365/copilot/extensibility/agent-builder-add-knowledge), each agent can use:

- Four public website URLs, no more than two levels deep and without query parameters.
- Up to 100 SharePoint files, one SharePoint list and 50 OneDrive files.
- Five Teams chats and five Teams meetings.
- Up to 20 uploaded files. Word, PowerPoint, PDF and text files can be up to 512 MB each, and Excel files up to 30 MB.

Newly added SharePoint or OneDrive files may show a **Preparing** status for a few minutes. The agent won't use them until they're ready. Anyone who can use an agent can see answers grounded in its embedded files, so don't upload anything you wouldn't show them.

## How to share your agent

After you select **Create**, the agent is private. To share it:

1. Open the agent and select **Share**.
2. Enter a name, group or email address.
3. Choose **Can edit** (an owner) or **Can chat** (a user who can only chat). A group can only get **Can chat**.
4. Select **Add**.

To make it visible to everyone in your tenant, turn on **Org-wide sharing for chat access**. Other users can then find it in the Agent Store. Microsoft says sharing does not deploy an agent across the organization or to other channels. People you share with also need the license type for the capabilities the agent uses, or they may get an error. To list the agent in your organization's catalog, you submit it and an admin reviews it.

## When Agent Builder is not enough

Agent Builder can't author actions that call external services. Microsoft's [comparison page](https://learn.microsoft.com/en-us/microsoft-365/copilot/extensibility/copilot-studio-experience) (updated October 23, 2026) points to Copilot Studio when you need workflows, external channels such as a customer-facing website, or separate development and production environments. You can copy an agent from Agent Builder to Copilot Studio. The copy is a separate snapshot, and some knowledge sources and capabilities aren't copied. Copilot Studio billing varies by harness. For background on that, see our report on [Microsoft's Copilot harness](https://claudegpt.si/news/microsoft-copilot-harness-foundry).

We didn't run these steps ourselves. They come from Microsoft's documentation as of October 31, 2026, and menus and license terms change, so check the linked pages if a label differs.

## Frequently asked questions

### Do I need a Microsoft 365 Copilot license to create an agent?

Not for a basic one. Microsoft's docs say Copilot Chat is available to all Microsoft 365 users and supports agents grounded on instructions or the web. SharePoint, connector and embedded-file knowledge needs a Copilot license or pay-as-you-go billing, as of October 31, 2026.

### How do I share a Copilot agent with my team?

Select Create, then Share, add people and choose Can edit or Can chat. To show it to everyone in the tenant, turn on Org-wide sharing for chat access, unless your admin has disabled it.

### What is the difference between Agent Builder and Copilot Studio?

Agent Builder is the guided tool inside Microsoft 365 Copilot for instruction and knowledge based agents. Microsoft points to Copilot Studio for external-service actions, workflows, outside channels and separate environments.

### How long can agent instructions be?

Instructions can be up to 8,000 characters, the description up to 1,000 characters and the name up to 30 characters, according to Microsoft's Agent Builder guide.

## Sources

- [Build agents in Agent Builder](https://learn.microsoft.com/en-us/microsoft-365/copilot/extensibility/agent-builder-build-agents), Microsoft Learn
- [Set up your development environment for a Microsoft 365 Copilot plugin](https://learn.microsoft.com/en-us/microsoft-365/copilot/extensibility/prerequisites), Microsoft Learn
- [Add knowledge sources to an agent in Agent Builder](https://learn.microsoft.com/en-us/microsoft-365/copilot/extensibility/agent-builder-add-knowledge), Microsoft Learn
- [Share and manage agents built in Agent Builder](https://learn.microsoft.com/en-us/microsoft-365/copilot/extensibility/agent-builder-share-manage-agents), Microsoft Learn
- [Choose between Agent Builder and Copilot Studio to build your agent](https://learn.microsoft.com/en-us/microsoft-365/copilot/extensibility/copilot-studio-experience), Microsoft Learn
- [Build your own agent with Microsoft 365 Copilot](https://support.microsoft.com/en-us/microsoft-365-copilot/build-your-own-agent-with-microsoft-365-copilot), Microsoft Support