Build Your First Microsoft 365 Copilot Work Agent in Under 10 Minutes

Microsoft 365 Copilot now lets any licensed user build custom AI work agents in minutes using the no-code Agent Builder tool. You can create specialized assistants grounded in your SharePoint documents, OneDrive files, or web content without writing any code. The new Work IQ intelligence layer announced at Microsoft Ignite 2025 makes these agents even smarter by understanding your job role and company context. This tutorial walks you through creating, configuring, and sharing your first agent.

Microsoft 365 Copilot’s Agent Builder now empowers anyone with a Copilot license to create custom AI assistants with no coding required. These work agents can automate repetitive tasks, answer team questions using your company’s SharePoint files, and accelerate workflows across your organization.

With new capabilities announced at Microsoft Ignite 2025, including the Work IQ intelligence layer and Agent 365 control plane, building specialized agents tailored to your business needs has never been easier. Here’s how to build your first one.

What Are Microsoft 365 Copilot Work Agents?

Work agents are custom AI assistants you build inside Microsoft 365 Copilot that understand specific tasks, access designated knowledge sources, and follow instructions you define. Unlike general Copilot chat, these agents are purpose-built for specialized workflows like HR onboarding, project documentation, customer research, or technical support.

Microsoft’s new Work IQ layer enables agents to understand your role, your team’s context, and your company’s unique data while respecting existing permissions and compliance controls. Agents created in Agent Builder are “declarative agents” ; they use natural language instructions and grounded knowledge rather than complex code.

Prerequisites and License Requirements

To build work agents, you need an active Microsoft 365 Copilot license assigned to your account. The Agent Builder tool is included with your Copilot subscription at no extra cost. Your organization must also have enabled the Copilot service and configured access to SharePoint or OneDrive if you plan to use internal documents as knowledge sources.

Unlike Copilot Studio on the Power Platform, Agent Builder doesn’t require separate licensing or Power Platform credits. However, users interacting with your agent must also have Copilot licenses to access it in Microsoft 365 Copilot chat.

How to Build Your First Custom Work Agent

Step 1 – Access Agent Builder

Open the Microsoft 365 Copilot app in your browser or Teams. In the left navigation pane, select Agents, then click Create Agent. You’ll see options to start from a template or describe your agent using a simple prompt.

Step 2 – Create from Template or Prompt

If you’re new to agent building, start with a template like “Interview Question Assistant” or “Customer Insights Agent”. These pre-built examples include instructions and suggested knowledge sources. Alternatively, describe what you want: “Help me create career development plans based on employee roles and goals”.

The system will generate an initial agent configuration including a name, description, and baseline instructions.

Step 3 – Configure Agent Instructions

Agent instructions are the “brain” of your assistant. Think of them as an extended prompt that defines the agent’s role, tone, guidelines, and step-by-step approach. Effective instructions should specify:

• Role: “You are an HR policy expert for our company”
• Tone: “Respond professionally but conversationally”
• Guidelines: “Always cite specific policy documents when answering questions”
• Process: “First, search our policy library. Then, summarize findings in bullet points”

Microsoft recommends breaking down complex workflows into sequential steps the agent should follow.

Step 4 – Add Knowledge Sources

Click Knowledge to connect data sources. Agent Builder supports:

• SharePoint sites, folders, or specific document libraries
• OneDrive files and folders
• Public web content (if enabled by your admin)

When you add SharePoint or OneDrive content, the agent respects existing file permissions; users can only see information from documents they already have access to. This maintains data security without additional configuration.

Step 5 – Test Your Agent

Use the right-side test pane to chat with your agent before publishing. Ask questions it should be able to answer using your knowledge sources. Verify that:

• Responses align with your instructions
• The agent cites correct sources
• Tone matches your guidelines
• Answers are accurate and complete

If responses are off-target, refine your instructions or add missing documents to knowledge sources.

Step 6 – Share with Your Team

Once satisfied, click Create to publish your agent. Then select Share to grant access to specific users or security groups. Agent Builder currently supports sharing with individuals or groups, not “everyone in organization” for auto-shared SharePoint files.

Shared users can access your agent from the Agents menu in their Copilot interface.

Best Practices for Agent Instructions

Write instructions in natural language as if explaining the task to a knowledgeable colleague. Be specific about expected output format bulleted lists, tables, or paragraph summaries. Include examples of good responses if the task is nuanced.

Avoid overly broad instructions like “be helpful.” Instead, define boundaries: “Only answer questions about company benefits. If asked about payroll systems, direct users to IT support”.

Knowledge Sources You Can Connect

Agent Builder integrates seamlessly with Microsoft 365 content repositories but has limitations compared to Copilot Studio. You cannot directly connect external databases, APIs, or transactional systems. Knowledge sources are read-only agents that retrieve information but don’t modify files or trigger workflows.

SharePoint integration requires the “Semantic Index” feature, which is enabled automatically with Copilot licenses. Developer tenants without paid Copilot licenses cannot use SharePoint knowledge sources effectively.

Agent Builder vs Copilot Studio

Feature	Agent Builder	Copilot Studio
Target Users	Business users, knowledge workers	IT teams, developers
Complexity	Simple Q&A agents	Complex workflows, multi-step processes
Integrations	M365 data only (SharePoint, OneDrive)	1500+ connectors, APIs, external systems
Licensing	Included with M365 Copilot	Requires Power Platform licensing
Deployment	M365 Copilot chat only	Multi-channel: web, Teams, WhatsApp, SMS
Actions	Limited (code interpreter, image generation)	Full automation via Power Automate, API calls

Use Agent Builder for quick departmental assistants grounded in internal documents. Escalate to Copilot Studio when you need external integrations, autonomous triggers, or customer-facing deployments.

Common Use Cases and Templates

Microsoft provides pre-built templates for:

• Interview Question Assistant – Generates role-specific, inclusive interview questions
• Customer Insights Agent – Prepares strategic engagement summaries
• Scrum Assistant – Tracks agile team alignment and sprint planning
• Marketing Content Generator – Optimizes social media posts
• Training Content Writer – Creates learning materials from source documents

These templates serve as starting points you can customize with your own knowledge sources and instructions.

What’s New: Microsoft Ignite 2025 Updates

At Microsoft Ignite 2025, Microsoft announced major enhancements to the agent ecosystem:

• Work IQ – An intelligence layer that enables agents to understand your job role, team context, and company data while maintaining security controls
• Agent 365 – A centralized control plane for managing, securing, and monitoring agents across your organization
• Specialized Office agents – Dedicated Word, Excel, and PowerPoint agents that can directly edit documents in “Agent Mode”
• Work IQ APIs – Developers can now access Work IQ capabilities to build custom agents programmatically

These updates significantly expand what agents can do beyond simple knowledge retrieval.

Troubleshooting Common Issues

Agent can’t find knowledge sources: Verify you have read access to the SharePoint site or OneDrive folder you connected. Check that web search isn’t disabled by your admin if using web content.

SharePoint auto-sharing fails: Agent Builder doesn’t support auto-sharing with “everyone in organization”. Manually update file permissions or share with specific security groups instead.

Responses are inaccurate: Add more specific instructions about how to interpret documents. Ensure your knowledge sources contain the information needed to answer expected questions.

Pros & Cons

Pros of Building Copilot Work Agents

• No coding skills required anyone can create agents
• Included free with Microsoft 365 Copilot license
• Respects existing SharePoint/OneDrive permissions automatically
• Templates accelerate development
• New Work IQ layer provides company context awareness
• Agents can be shared easily with team members

Cons and Limitations

• Requires Microsoft 365 Copilot license ($30/user/month)
• Limited to Microsoft 365 data sources only
• Cannot connect external APIs or databases
• No autonomous triggers or scheduled actions
• Users interacting with agents also need Copilot licenses
• Cannot be deployed in Teams chat (current limitation)
• SharePoint auto-sharing restricted to security groups

Microsoft 365 Copilot Agent Builder – Technical Specifications

Platform: Microsoft 365 Copilot (web and Teams interface)

Development Environment: No-code, natural language configuration

Supported Knowledge Sources:

• SharePoint sites, folders, document libraries
• OneDrive files and folders
• Public web content (admin-configurable)

Agent Capabilities:

• Code Interpreter (premium feature, billed separately)
• Image generation (if enabled)
• Semantic search via Work IQ

Access Control: User-level SharePoint/OneDrive permissions respected

Licensing Requirements:

• Microsoft 365 Copilot license for agent creators
• Microsoft 365 Copilot license for agent users
• Microsoft Entra ID accounts required

Deployment Channels: Microsoft 365 Copilot chat only

Known Limitations:

• No Teams chat deployment
• Auto-sharing SharePoint files only works with security groups
• Not compatible with Lockbox or Customer Managed Keys
• Requires Semantic Index (automatically enabled with Copilot license)

Integration Differences from Copilot Studio:

• No Power Automate flow triggers
• No external API connectors
• No autonomous/scheduled execution
• No multi-channel deployment

Recent Updates (November 2025 – Microsoft Ignite):

• Work IQ intelligence layer integration
• Agent 365 management control plane
• Work IQ API access for custom agent development
• Enhanced SharePoint knowledge source configuration

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