Data Loss Prevention (DLP) in Microsoft Purview: Step-by-Step for Microsoft 365 Environments

Protecting sensitive data is no longer optional—it’s essential. Organizations in every sector face increasing risks from data breaches, insider threats, and compliance violations. That’s where Data Loss Prevention (DLP) becomes critical. With Microsoft Purview, enterprises using Microsoft 365 gain powerful tools to build, deploy, and monitor DLP policies that safeguard information across endpoints, cloud apps, Exchange Online, SharePoint, and OneDrive.

This article provides a step-by-step guide to configuring Microsoft Purview Data Loss Prevention (DLP) for your organization. You’ll learn how to create policies, define sensitive information types like credit card numbers or social security numbers, and monitor activity through tools like Activity Explorer and dashboards.

If you’re responsible for cybersecurity, data protection, or compliance in your Microsoft environment, this walkthrough will help you move from planning to implementation.

Why Data Loss Prevention (DLP) Matters in Microsoft 365

The volume of sensitive data shared across cloud apps like Teams, OneDrive, and SharePoint is growing daily. Without controls, organizations risk exposing personal data, financial details, or intellectual property. A strong data loss prevention policy reduces this risk by automatically enforcing rules when sensitive data is shared, stored, or accessed inappropriately.

Microsoft Purview Data Loss Prevention provides:

• End-to-end visibility of where sensitive information lives.
• Real-time monitoring of endpoints and repositories.
• Automated protective actions, such as blocking file sharing or restricting downloads.
• Integration with Microsoft Defender and Microsoft Security stack for enhanced threat protection.

This makes Microsoft Purview DLP a cornerstone of data governance and compliance strategies.

Step 1: Onboarding Microsoft Purview for Data Loss Prevention

Before deploying policies, ensure your environment is ready:

1. Access the Purview Portal – Sign into the Microsoft Purview compliance portal with the right permissions (Compliance Administrator or Security Administrator).
2. Endpoint onboarding – Use Microsoft Intune or configuration packages for Windows 10 and above to enable Endpoint DLP. This ensures monitoring extends to devices, not just cloud storage.
3. Stakeholder alignment – Engage compliance teams, IT admins, and business leaders to define sensitive information and regulatory needs.

This onboarding phase ensures you can manage policy configuration across Microsoft 365 apps and beyond.

Step 2: Using Templates for Policy Creation

Microsoft Purview provides built-in templates to simplify policy creation. Templates map to common regulations like GDPR, HIPAA, PCI-DSS, and others.

• Navigate to Data Loss Prevention in the Purview portal.
• Select Create policy → Choose a template (e.g., “Financial Data” for detecting credit card numbers).
• Configure policy scope: Exchange Online, SharePoint, OneDrive, Microsoft Teams, and endpoints.

Templates accelerate deployment while reducing the chance of misconfiguration.

Step 3: Customizing DLP Rules and Sensitive Information Types

While templates are useful, many organizations require custom policy designs. Microsoft Purview lets you:

• Define sensitive information types, such as social security numbers, passport details, or custom keywords.
• Add dlp rules specifying what actions to take: block sharing, require overrides, or send notifications.
• Enable policy tips in Office apps so users receive real-time feedback when attempting restricted actions.

By fine-tuning rules, you reduce false positives and avoid unnecessary disruptions in user workflows.

Step 4: Extending DLP to Endpoints and BYOD

Data doesn’t only live in the cloud—files can be copied, printed, or moved to USB drives. Endpoint DLP extends protection to user devices.

Key capabilities include:

• Monitoring device health and enforcing device compliance before applying rules.
• Controlling actions like copy/paste, screen capture, or print when sensitive data is involved.
• Supporting BYOD and remote work scenarios through Microsoft Intune and device management.

By securing endpoints, you close one of the most common gaps in data security strategies.

Step 5: Monitoring with Activity Explorer and Dashboards

Policy deployment is only half the work—ongoing monitoring is vital. Microsoft Purview offers several tools:

• Activity Explorer: Provides granular logs of user actions, such as attempts to email sensitive information or upload files with credit card numbers to OneDrive.
• Dashboards: Summarize policy matches, trends, and risk areas across workspaces.
• DLP Alerts: Trigger notifications for administrators when high-risk activities occur.

This real-time validation ensures your DLP rules are effective and helps identify new vulnerabilities.

Step 6: Enforcing Policy Actions and Overrides

When a dlp policy detects violations, you can define protective actions, such as:

• Blocking external sharing of documents.
• Restricting access to files in SharePoint or OneDrive.
• Requiring overrides with business justification, giving flexibility when needed.

These functions balance data protection with productivity, ensuring users can still collaborate without putting sensitive data at risk.

Step 7: Continuous Policy Lifecycle and Optimization

Like any cybersecurity control, DLP requires ongoing management:

• Review reports to assess false positives and adjust policy configuration.
• Refine dlp rules as business processes evolve.
• Integrate with Microsoft Defender for Endpoint and Microsoft Security for unified threat protection.
• Expand policies to cover new cloud apps or on-premises repositories as your IT footprint grows.

This lifecycle approach ensures your DLP implementation scales with organizational needs.

Best Practices for Microsoft Purview Data Loss Prevention

1. Always start small – Pilot policies in test groups before enterprise-wide rollout.
2. Leverage sensitivity labels – Combine DLP policies with sensitivity labels from Microsoft Purview Information Protection for layered defense.
3. Use real-time policy tips – Educate users in the moment to build a security-aware culture.
4. Automate workflows – Streamline alerts, policy matches, and reporting with automated workflows.
5. Integrate Microsoft Purview with Copilot – Use Copilot for faster analysis of policy configuration and data governance insights.

These strategies maximize ROI and strengthen your security posture.

The Role of Microsoft Purview DLP in Data Governance

Beyond compliance, Microsoft Purview Data Loss Prevention supports broader data governance:

• Protecting intellectual property and trade secrets.
• Reducing attack surface against cyber threats like phishing and malware.
• Supporting retention policies for regulated industries.
• Aligning with stakeholders to meet global standards for data security and personal data protection.

When paired with Office 365, Microsoft Teams, Power BI, and SharePoint, Purview DLP provides an end-to-end framework for secure collaboration.

Conclusion: Strengthening Microsoft 365 Security with Purview DLP

Implementing Data Loss Prevention (DLP) in Microsoft Purview is not just about compliance—it’s about proactive data protection in a world where cyber threats and data breaches are constant. By following this step-by-step guide, you can:

• Deploy dlp policies across Microsoft 365 apps and endpoints.
• Monitor activities with Activity Explorer and real-time dashboards.
• Protect sensitive information through automation, policy tips, and protective actions.
• Reduce risk while empowering users with flexibility and productivity.

For organizations embracing Microsoft 365, strong Data Loss Prevention policies are critical to maintaining trust, compliance, and resilience.

Ready to strengthen your Microsoft 365 security? Explore NE Digital Microsoft 365 Managed Services and see how experts can help you deploy and manage Microsoft Purview DLP effectively.