Fixing “Create PowerShell Session Failed Using OAuth”

Understanding the Create Session Failure

The “create PowerShell session is failed” error appears when authenticating with OAuth to establish a remote session.

Key characteristics of this issue:

• Occurs when running Connect-ExchangeOnline or Connect-MsolService
• Prevents PowerShell modules like ExchangeOnlineManagement from loading
• Specifies that OAuth authorization failed
• Access token cannot be retrieved to start session
• Typically occurs due to expired tokens, permissions problems, or authentication conflicts

Understanding the OAuth flow and possible points of failure will assist troubleshooting efforts.

Troubleshooting OAuth Authentication Issues

Here are the main steps to diagnose what is causing the PowerShell OAuth failure:

Ensure Latest Module Versions

Update the ExchangeOnlineManagement and MSOnline modules to their latest versions:

Update-Module ExchangeOnlineManagement
Update-Module MSOnline

Outdated modules can exhibit authentication bugs fixed in newer releases.

Validate Permissions and Licensing

Check the account has proper permissions and licenses:

• Admin role like Global Administrator or Exchange Administrator
• Licensed for Exchange Online and Microsoft 365
• Not a restricted admin with limited permissions

Requests may fail if the account lacks admin privileges and scopes.

Review Sign-In Logs

Check Azure AD sign-in logs for relevant authentication failures around the time of the error.

Filter by the user account and app name like ExchangePowershellModule to isolate relevant entries.

The logs may provide details on the failure cause like expired token, bad request, etc.

Test with Alternate Accounts

Try launching the PowerShell session with a different admin account as a control test.

If it works for other accounts, it indicates a problem specific to the original account used.

Re-Authorize the Azure AD App

The Azure AD app registration for PowerShell may need re-authorizing for your tenant.

In the Azure Portal, find the ExchangeOnlinePowershellModule app and grant admin consent under API permissions.

This ensures PowerShell has proper OAuth access.

Following these troubleshooting steps will surface any permissions, authentication, or configuration issues.

Resolving Common Issues Causing Failure

Based on the troubleshooting above, here are solutions for the most common specific causes of the error:

Expired Access Token

The access token for PowerShell may have expired and needs refreshing:

# Force new access token
Disconnect-ExchangeOnline 

Connect-ExchangeOnline

Disconnecting before reconnecting will clear any expired tokens causing issues.

Invalid Application ID

An invalid application ID in the module’s configuration can break authentication.

Get the correct IDs from Azure AD for your tenant and update the values in:

$env:app_id
$env:auth_app_id

Use the ExchangePowershellModule and MSOnlinePowerShellModule app IDs specifically.

Restricted Admin Missing Scopes

If you are using a restricted admin without tenant-wide permissions, certain PowerShell scopes may be disabled.

In Azure AD, edit the admin role and ensure the required Exchange Online and Microsoft Graph permissions are granted.

Authentication Protocol Mismatch

PowerShell may be attempting incompatible auth protocols like OAuth 2.0 and basic auth.

Specify -ExchangeEnvironmentName O365GermanyCloud if connecting to German cloud.

For other topologies, disable multifactor authentication to force OAuth.

Conflict With Mailsnapin Module

If the Microsoft.Exchange.Management.PowerShell.E2010 snapin is loaded, it can interfere with modern auth.

Fully remove the snapin module before loading Exchange Online modules:

Remove-PSSnapin Microsoft.Exchange.Management.PowerShell.E2010

This prevents conflicting credential scenarios that can result in failures.

Additional Fixes for Persistent Issues

For tricky cases where the PowerShell OAuth issues persist, here are some additional troubleshooting steps:

• Register a new app solely for PowerShell use to isolate auth config.
• Wipe all existing PowerShell modules and install afresh to eliminate conflicts.
• Launch PowerShell as administrator to bypass any file permission restrictions.
• Disable multi-factor authentication on the admin account as a test.
• Try alternating between modern auth protocols like OAuth 2.0 and basic auth.
• Spin up a fresh proof-of-concept tenant to eliminate tenant configuration as root cause.
• Open a support case with Microsoft providing detailed failure information for escalated troubleshooting.

Taking these extra steps can help get past obstacles for stubborn authentication failures blocking PowerShell remoting.

Automating OAuth Connectivity Validation

Validating PowerShell connectivity can be automated by creating a test script:

# Try to import modules
Try {  
  Import-Module ExchangeOnlineManagement
}
Catch {
  Write-Error "Exchange module failed to load with error: $($_.Exception.Message)"
  Exit 1
}

Try {
  Connect-ExchangeOnline -ErrorAction Stop
  Write-Output "Exchange Online connected successfully"
}
Catch {
  Write-Error "Exchange Online connection failed with error: $($_.Exception.Message)" 
  Exit 1
}

# If reached, all tests passed
Write-Output "Authentication test succeeded"

This provides a reusable way to verify successful PowerShell authentication and catch any failures.

Schedule it to run routinely to act as a monitoring canary.

Mitigating Authentication Issues

To reduce future authentication issues with PowerShell and OAuth:

• Maintain permission hygiene and don’t over-grant admin privileges.
• Keep modules updated through automation to avoid version mismatches.
• Exclude PowerShell traffic from multi-factor authentication if possible.
• Reduce reliance on cmdlets needing remote sessions where feasible.
• Construct centralized scripts to simplify and standardize connections.
• Switch from OAuth to basic authentication for simpler but less secure scenarios.

Implementing authentication best practices will minimize the likelihood of PowerShell remote session failures.

Summary

Troubleshooting the “create PowerShell session is failed using OAuth” requires methodically eliminating potential permission, authentication, and configuration issues:

• Update module versions to latest.
• Verify admin permissions and licensing.
• Check sign-in logs for request failures.
• Test with alternate accounts.
• Re-authorize the Azure AD app registration.
• Handle expired tokens, restricted roles, protocol mismatches.

Automated tests and following Microsoft OAuth best practices can reduce future occurrences of the error and difficulties establishing remote PowerShell sessions for Exchange Online or Microsoft 365 administration.

References

Helpful resources for troubleshooting PowerShell OAuth authentication issues:

• Configure OAuth for Multi-Factor Authentication
• Authorization Errors with PowerShell
• Enabling Remote PowerShell Access
• Update the PowerShell Module
• Azure AD Authorization Debugger

Using the structured troubleshooting approach outlined here along with Microsoft’s supporting documentation will allow you to diagnose and permanently resolve PowerShell OAuth authentication failures. This will enable establishing stable remote PowerShell connections.