Monitoring and Alerting in Microsoft 365 with Microsoft Defender XDR

Monitoring and alerting in Microsoft 365 has become a core requirement for organizations seeking to stay ahead of evolving cyber threats. As workloads expand across cloud, hybrid, and on-premises environments, the challenge is not only detecting suspicious activity but also correlating it across multiple data sources for proactive response.

By integrating Microsoft Defender XDR with Microsoft Sentinel, security teams can achieve end-to-end visibility, enhanced threat detection, and improved orchestration of response actions. This combination bridges the gap between security products, reduces alert fatigue, and empowers SOC analysts with advanced insights to strengthen overall security posture.

This article explores how organizations can implement a comprehensive strategy for monitoring and alerting in Microsoft 365, focusing on Defender XDR’s native capabilities and Sentinel’s SIEM/SOAR power.

Why Monitoring and Alerting in Microsoft 365 Matters

Microsoft 365 environments are prime targets for malware, phishing, and account compromise attempts. Email messages, user accounts, and Active Directory identities are all common attack surfaces. Without integrated visibility, organizations face challenges such as:

• Fragmented security alerts spread across multiple consoles.
• Difficulty correlating related alerts into meaningful incidents.
• Delays in identifying vulnerability exploitation or suspicious activity.
• Limited ability to automate remediation actions.

Modern cybersecurity requires a layered approach that merges threat intelligence, advanced hunting, and centralized notifications into a cohesive system. That’s where the integration of Microsoft Defender XDR and Microsoft Sentinel comes into play.

Overview of Microsoft Defender XDR

Microsoft Defender XDR is Microsoft’s extended detection and response platform that unifies signals from multiple security solutions across Microsoft 365 and beyond. It integrates telemetry from:

• Microsoft Defender for Endpoint – detecting exploits, malware, and device-based risks.
• Microsoft Defender for Office 365 – protecting email messages, attachments, and collaboration tools from phishing and other threats.
• Microsoft Defender for Identity – monitoring Active Directory for lateral movement or credential abuse.
• Microsoft Defender for Cloud Apps – providing visibility into cloud-based workloads and sensitive data usage.

Through the Microsoft Defender portal, analysts can manage the alerts queue, investigate the incident queue, and trigger remediation actions. The platform also enables automated investigation and response capabilities that speed up detection-to-mitigation workflows.

Role of Microsoft Sentinel

Microsoft Sentinel is a cloud-native SIEM and SOAR solution running on Azure. Unlike the Defender portal, which focuses on Microsoft 365 workloads, Sentinel aggregates security logs across diverse environments:

• Microsoft 365 workloads and onboarding of Defender telemetry.
• On-premises devices and legacy systems.
• Third-party security products via APIs and connectors.

Sentinel enhances monitoring with:

• Dashboards for real-time visibility.
• Threat hunting queries powered by advanced hunting capabilities.
• Automation via playbooks and workflows.
• Long-term retention of security data for compliance.

When combined with Defender XDR, Sentinel provides a complete picture of cybersecurity activity across the enterprise.

Integration of Microsoft Defender XDR and Sentinel

The integration is designed to create a unified pipeline of security alerts, notifications, and context-rich incidents for security teams.

Prerequisites

Before integration, ensure:

• Microsoft Entra ID is properly configured with appropriate permissions and role-based access control (RBAC).
• Analysts have the security administrator role or delegated RBAC to configure connectors.
• Workloads from Defender products are onboarded into Sentinel.

Step 1: Connect Microsoft Defender XDR to Sentinel

Using Sentinel’s connectors, admins can stream data from:

• Microsoft Defender for Endpoint
• Microsoft Defender for Office 365
• Microsoft Defender for Cloud Apps
• Microsoft Defender for Identity

This ensures all Defender-generated security alerts flow into Sentinel for correlation and deeper analytics.

Step 2: Configure Incident Correlation

Sentinel can merge related alerts into single incidents, reducing false positives and improving analyst triage. These incidents appear in both the incident queue of Defender and Sentinel.

Step 3: Build Automated Workflows

With Sentinel, SOC teams can design automation playbooks for tasks such as:

• Sending notifications via Teams or email.
• Triggering remediation actions in Defender.
• Blocking malicious user accounts through Microsoft Entra ID.

This automation streamlines security operations (SecOps) and reduces response time.

Key Capabilities of Monitoring and Alerting with Integration

1. Unified Security Operations Dashboard

Defender XDR provides a single-pane view of security alerts in security.microsoft.com, while Sentinel consolidates these with data from Azure, on-prem, and third-party security solutions. Together, they enable security teams to monitor real-time threats across all vectors.

2. Advanced Threat Detection and Threat Hunting

Using Defender’s advanced hunting queries and Sentinel’s threat hunting workbooks, analysts can search telemetry for signs of malware, phishing, or suspicious activity. Cross-platform threat intelligence enriches detections, making it easier to spot sophisticated attacks.

3. Automated Investigation and Remediation

Defender’s automated investigation capability reduces manual triage by analyzing artifacts, user accounts, and devices. Sentinel complements this with automated workflows for remediation actions, such as isolating endpoints or disabling compromised identities.

4. SOC Optimization and Reduced Alert Fatigue

By correlating incidents and filtering false positives, the integration helps SOC teams focus on high-priority issues. Features like the alerts queue and incident queue improve case management for analysts.

5. Role-Based Access Control and Permissions Management

Ensuring the right permissions is critical. Integration with Microsoft Entra ID enforces role-based access control, ensuring only authorized personnel can view or act on sensitive incidents.

Best Practices for Monitoring and Alerting in Microsoft 365

1. Onboard All Workloads – Connect Defender for Endpoint, Defender for Office 365, Defender for Cloud Apps, and Defender for Identity to maximize visibility.
2. Use Advanced Hunting Regularly – Develop queries to proactively detect vulnerabilities and identify potential suspicious activity.
3. Leverage Automation – Build Sentinel playbooks for repetitive tasks like disabling risky user accounts or sending notifications to executives.
4. Prioritize Triage – Train analysts to work effectively with the alerts queue and incident queue to reduce response delays.
5. Enforce RBAC – Use role-based access control in Microsoft Entra ID to limit who can grant access or perform remediation actions.
6. Test Response Capabilities – Regularly simulate phishing or malware incidents to validate response capabilities and analyst readiness.
7. Integrate Microsoft Purview – Extend visibility into compliance and data loss prevention (DLP) to protect sensitive workloads.

Benefits of Defender XDR and Sentinel Integration

• Comprehensive visibility across Microsoft 365, Azure, and third-party systems.
• Optimized security posture through proactive monitoring and advanced threat detection.
• Reduced SOC workload with automated workflows and correlation of related alerts.
• Improved incident lifecycle management via integrated dashboard views.
• Faster containment of attacks with automated remediation actions and response capabilities.

Challenges and Considerations

While powerful, organizations must address:

• Onboarding complexity across diverse workloads.
• Ensuring proper RBAC and permissions to avoid security gaps.
• Managing retention policies to balance compliance with cost.
• Training analysts to use both the Defender portal and Sentinel effectively.

Conclusion

Monitoring and alerting in Microsoft 365 requires more than isolated tools—it demands integration, correlation, and automation. By connecting Microsoft Defender XDR with Microsoft Sentinel, organizations can transform raw alerts into actionable intelligence, streamline security operations, and reinforce their defenses against cybersecurity threats.

For IT leaders and security teams, this integration is not just a technical improvement but a business-critical strategy for safeguarding digital assets, ensuring compliance, and enhancing overall resilience.

If your organization needs expert support to deploy, optimize, and manage Defender and Sentinel, explore our Microsoft 365 managed services. Our specialists help you strengthen monitoring, streamline alerting, and maximize the value of your Microsoft security investments.