Why did OneDrive suddenly stop letting people share outside the company?

Check the sharing and invitation layers separately. Confirm external sharing is enabled for the organization and the affected users’ OneDrive sites, then check Entra external collaboration settings to see who is allowed to invite guests. A sharing link can be allowed while the invitation needed to give an outside person access is blocked.

If those settings seem right, review Conditional Access policies too, especially requirements involving MFA or trusted locations. Compare the same sharing attempt from an affected user and a working user, and note the exact error and time before changing several settings at once.

This may be related to a rollout that uses Entra B2B guest accounts for external sharing, rather than relying on a one-time passcode flow. That can make an old sharing setup behave differently even if nobody intentionally changed the tenant settings. The rollout and configuration details can vary, so I’d verify the current tenant behavior rather than assume one toggle explains every case.

The key question is whether the person sharing is permitted to invite guests and whether the external recipient can complete the required sign-in. The error wording points toward guest invitation permissions, but check the actual settings before treating that as the whole diagnosis.

For a large organization, making IT approve every outside recipient sounds like a bottleneck. A more workable setup is to let appropriate staff invite guests, while keeping sharing limited to named recipients and setting an expiration period for links or access where your configuration supports it.

You can also delegate invitation rights to an approved group if you need a tighter boundary. Just remember that link expiration is a guardrail, not a fix for a setting that prevents users from inviting guests in the first place.

Don’t solve this by opening every external-sharing option to everyone until you know what changed. First test with one affected account and one external recipient, then adjust the specific invitation or access rule that is blocking them. If a Conditional Access policy is involved, review its MFA and location requirements rather than turning off the policy globally.