Microsoft 365 Groups vs Distribution Lists vs Shared Mailboxes: What to Use When

Microsoft 365 has at least four different ways to send email to a group of people, and the differences between them are not obvious from the admin center. A distribution list, a Microsoft 365 Group, a shared mailbox, and a mail-enabled security group all have email addresses. They all deliver messages to multiple people. But they work differently under the hood, create different resources in the background, and are designed for different use cases. Choosing the wrong one creates problems that surface months later when someone needs to find an old email, manage permissions, or understand why their Teams channel has a mailbox nobody checks.

This guide explains what each type actually is, what it creates behind the scenes, and when to use each one.

Distribution lists

A distribution list is the simplest group type. It has an email address, and when someone sends email to that address, every member receives a copy in their own inbox. That is all it does.

How it works

When someone sends an email to [email protected] (a distribution list), Exchange Online copies the message and delivers it to every member’s personal mailbox. Each person sees the message in their own inbox alongside all their other email. There is no shared view. Nobody can see whether another member has read or replied to the message. If two people both reply, neither one knows the other responded unless they are CC’d.

What it creates in the background

A distribution list creates a mail-enabled object in Exchange Online. It does not create a mailbox, a SharePoint site, a Teams channel, or any other resource. It is purely a routing mechanism for email.

When to use it

• Company-wide announcements (all-staff@, announcements@)
• Departmental email where everyone needs their own copy but nobody needs to coordinate responses (marketing@, engineering@)
• External-facing addresses where you want multiple people to receive the email but each person handles it independently
• Situations where you need to include external email addresses as members (distribution lists can include contacts outside your organization)

When not to use it

• When multiple people need to coordinate responses to incoming email (use a shared mailbox instead)
• When you need a shared file storage location, calendar, or Teams channel alongside the email address (use a Microsoft 365 Group)
• When you need to control access to SharePoint sites or other resources based on group membership (use a security group or a Microsoft 365 Group)

Permissions

Distribution lists have simple permissions: members receive email, and designated senders can send as the list or send on behalf of it. There is no concept of “owners” who can manage settings, although Exchange admins can designate who is allowed to modify the membership.

By default, anyone (internal or external) can send email to a distribution list. You can restrict this in the Exchange admin center to allow only internal senders, specific senders, or members of the list itself. Restricting external senders is common for internal-only lists like all-staff@.

Shared mailboxes

A shared mailbox is a real mailbox with its own inbox, sent items, and folders. Multiple people access it through Outlook alongside their personal mailbox. Unlike a distribution list, a shared mailbox provides a single, shared view of all incoming and outgoing email.

How it works

When someone sends email to [email protected] (a shared mailbox), the message arrives in the shared mailbox’s inbox. Every member who has access sees the same inbox. If one person reads a message, it shows as read for everyone. If someone replies, the reply appears in the shared mailbox’s sent items, visible to all members. This makes it possible to coordinate responses without stepping on each other.

For a complete walkthrough of creating and configuring shared mailboxes, see our shared mailbox setup guide.

What it creates in the background

A shared mailbox creates a mailbox in Exchange Online. It does not create a SharePoint site, a Teams channel, or a Planner board. It is a mailbox only. The key advantage is that it does not require a license as long as it stays under 50 GB.

When to use it

• Customer-facing addresses where multiple people need to manage incoming email (support@, info@, sales@, billing@)
• Departmental inboxes where coordination matters (who replied to this client? has anyone followed up on this request?)
• Preserving a departed employee’s email without keeping their license active
• Any scenario where a team needs to see both incoming and outgoing messages from a single address

When not to use it

• When you need file storage, a calendar that the whole team manages, or a Teams channel alongside the email. A shared mailbox has a calendar, but it is separate from Teams and SharePoint. If you want the full collaboration stack, use a Microsoft 365 Group.
• When you need per-message assignment or tracking of who is handling what. Shared mailboxes have no built-in ticketing or assignment system. If you have outgrown the “everyone looks at the inbox and handles what they can” model, you need a helpdesk tool.
• When you only need to broadcast messages to a list of people and nobody needs to see a shared inbox. Use a distribution list instead.

Permissions

Shared mailboxes have two permission levels: Full Access (can read, reply, delete, and organize messages) and Send As or Send on Behalf (can send email that appears to come from the shared mailbox address). Members are granted Full Access by default. Send As must be configured separately in the Exchange admin center.

There is no read-only access to a shared mailbox. If someone has Full Access, they can delete messages. Be selective about who gets access.

Microsoft 365 Groups

A Microsoft 365 Group is not just an email distribution mechanism. It is a container that provisions a bundle of connected resources: a shared mailbox, a SharePoint document library, a OneNote notebook, a Planner board, and optionally a Teams channel. It is the most feature-rich option but also the most complex.

How it works

When you create a Microsoft 365 Group, Exchange Online creates a group mailbox that functions similarly to a shared mailbox. Members can send email to the group address and see the conversations. But unlike a shared mailbox that appears as a separate mailbox in Outlook, Group conversations appear in a dedicated section in Outlook (the “Groups” section in the navigation pane) or in the Teams channel if a Team is connected.

The email behavior depends on a setting called “Send copies of group conversations and events to group members’ inboxes.” If enabled, members receive a copy of every group email in their personal inbox (similar to a distribution list). If disabled, members must go to the Group in Outlook or Teams to see the messages. This setting is off by default for Groups created through Teams and on by default for Groups created through Outlook.

What it creates in the background

This is the key difference. Creating a Microsoft 365 Group provisions:

• A group mailbox in Exchange Online (with conversations and a shared calendar)
• A SharePoint team site with a document library
• A OneNote notebook
• A Planner board
• A Power BI workspace (if applicable)
• A Teams channel (if a Team is created from the Group, or if the Group was created by creating a Team)

All of these resources are connected. Files shared in the Teams channel are stored in the SharePoint document library. The Planner board is accessible from Teams. The calendar is shared across Outlook and Teams. This integration is the primary reason Microsoft 365 Groups exist.

When to use it

• Project teams that need email, file storage, and task management in one place
• Departments that collaborate actively and need more than just email (marketing team, product team, leadership team)
• Any scenario where you would create both a distribution list and a SharePoint site for the same group of people
• When you want to use Microsoft Teams (creating a Team automatically creates a Microsoft 365 Group)

When not to use it

• When you only need email distribution and nothing else. A Group creates a SharePoint site, a notebook, and a Planner board whether you use them or not. If all you need is an email address that forwards to multiple people, a distribution list is simpler and does not create orphaned resources.
• When you need a customer-facing support inbox with sent items visible to the team. The shared mailbox model (one inbox, shared sent items, appears in Outlook sidebar) is more intuitive for this than the Group conversation model.
• When you need to include external email addresses as members. Microsoft 365 Groups can include guest users, but those guests need an Azure AD account (either their own or a guest account in your tenant). Distribution lists can include any external email address without provisioning an account.

Permissions

Microsoft 365 Groups have owners and members. Owners can add/remove members, change group settings, and delete the group. Members can access all the group’s resources (mailbox, files, Planner) but cannot change the group configuration.

Groups can be public (anyone in the organization can join and see the content) or private (only members can see the content, and an owner must approve new members). Most business groups should be private.

Mail-enabled security groups

A mail-enabled security group is a hybrid. It functions as both a security group (can be used to grant permissions to SharePoint sites, applications, and other resources) and an email distribution list (has an email address and can receive mail).

How it works

Email sent to the group address is distributed to all members, identical to a distribution list. But unlike a plain distribution list, the group can also be used in permission assignments. You can grant a mail-enabled security group access to a SharePoint site, a shared drive, or an application, and all members inherit that access.

What it creates in the background

A mail-enabled security group creates a security object in Azure AD/Entra ID with a mail-enabled attribute in Exchange Online. No mailbox, no SharePoint site, no extra resources.

When to use it

• When you need both email distribution and resource access control for the same set of people. For example, a “Finance” group that receives email at [email protected] and also has access to the Finance SharePoint site and the accounting application.
• When you want to manage SharePoint permissions by group rather than individual user, and those same groups need email addresses.

When not to use it

• When you only need email distribution (use a distribution list)
• When you only need resource access control without email (use a plain security group)
• When you need the full collaboration stack with files, Teams, and Planner (use a Microsoft 365 Group)

Side-by-side comparison

Feature	Distribution list	Shared mailbox	Microsoft 365 Group	Mail-enabled security group
Has email address	Yes	Yes	Yes	Yes
Shared inbox	No	Yes	Yes (Group conversations)	No
Shared sent items	No	Yes (with config)	No	No
Appears in Outlook sidebar	No	Yes	In Groups section	No
SharePoint site	No	No	Yes (auto-created)	No
Teams integration	No	No	Yes	No
Planner board	No	No	Yes (auto-created)	No
Shared calendar	No	Yes	Yes	No
Can grant resource permissions	No	No	Yes	Yes
Requires license	No	No (under 50 GB)	No	No
External members	Yes (any email)	No	Yes (guest accounts)	No
Owner/member model	No	Full Access / Send As	Owner / Member	No

The sprawl problem

The biggest practical issue with Microsoft 365 group types is uncontrolled creation. By default, any user can create Microsoft 365 Groups, which means any user can create Teams, which means any user can spawn SharePoint sites, Planner boards, and group mailboxes. On an unmanaged tenant, this leads to dozens of abandoned Groups with names like “Test Project,” “Marketing Ideas,” and “Q3 Planning” that nobody uses but that still consume resources and clutter the admin center.

Recommendations:

• Restrict who can create Microsoft 365 Groups to admins or a designated set of users. This is configured in Entra ID.
• Establish naming conventions for Groups and Teams before rolling out to the organization.
• Set expiration policies so unused Groups are automatically flagged and deleted after a defined period.
• Audit existing Groups quarterly to identify and clean up abandoned ones.

This is one of the areas where having a managed M365 provider makes a meaningful difference. Setting up governance policies before Groups proliferate is significantly easier than cleaning up after the fact.

Decision guide

“We need a team email address for customer inquiries.” Use a shared mailbox. Multiple people need to see the same inbox, track replies, and send from the same address.

“We need to send announcements to the whole company.” Use a distribution list. One-way communication, no shared inbox needed.

“We need a project workspace with email, files, and task tracking.” Use a Microsoft 365 Group (or create a Team, which creates the Group automatically).

“We need to grant a group of people access to a SharePoint site and also send them email.” Use a mail-enabled security group.

“We need to send email to a list that includes external partners.” Use a distribution list with external contacts as members, or a Microsoft 365 Group with guest access if the partners also need file access.

“An employee left and we need to keep their email accessible.” Convert to a shared mailbox. See our offboarding checklist for the full process.

Sequentur configures and manages all of these group types as part of our managed M365 services. If your tenant has a mix of Groups, distribution lists, and shared mailboxes that grew organically and nobody is sure what is what, we can audit and clean it up. Reach out through our contact page to get started.