Hi Lilly Hill
Thank you for reaching out to Microsoft Q&A forum
From my perspective view, after migrating company1.com emails to Microsoft 365 and removing it from on-premises Exchange's accepted domains, internal emails to @company1.com addresses bounce because Exchange still treats the domain as authoritative/local, attempting internal delivery instead of external routing via public MX records.
As far as I know, to resolve this issue you can follow these steps in order. This typically stems from cached configuration data in Exchange treating the domain as internal/authoritative despite its removal, or residual references preventing proper external routing. Restarting services often clears this but verify the prerequisites first.
1/ Confirm no lingering references to company1.com in On-Prem recipients
If any users, contacts, groups, or other recipients still have @company1.com in their email addresses (even as secondary aliases), Exchange may attempt local delivery, leading to failures since the domain is no longer accepted. You can use Exchange Management Shell (PowerShell) to check:
Get-Recipient -ResultSize Unlimited | Where-Object {$_.EmailAddresses -like "*@company1.com"} | Select Name, RecipientType, EmailAddresses
If any results appear, remove the offending aliases. For example, for a mailbox:
Set-Mailbox "AffectedUser" -EmailAddresses @{remove="******@company1.com"}
After changes, update the Offline Address Book (OAB) and Global Address List (GAL) if users are using cached mode in Outlook:
Get-GlobalAddressList | Update-GlobalAddressList
Get-OfflineAddressBook | Update-OfflineAddressBook
2/ Verify DNS resolution for company1.com on the Exchange Server
Ensure the on-premises Exchange server can correctly resolve the updated MX records for company1.com (pointing to Microsoft 365), you can log into the Exchange server and run nslookup
3/ Restart Exchange transport services to clear cache
Exchange can cache domain configurations, causing it to treat company1.com as internal even after removal. Restart-Service MSExchangeTransportIf that doesn't fully resolve, restart additional related services:
Restart-Service MSExchangeFrontendTransport
Restart-Service MSExchangeMailboxAssistants
4/ Add company1.com as a Remote Domain (Optional)
In case after trying all the above methods and the issue still persist, you can try to explicitly define company1.com as remote to override any default behavior.
New-RemoteDomain -Name "company1" -DomainName "company1.com"
This ensures Exchange treats it as external and applies standard outbound formatting/rules.
Hope my answer will help you, for any further concern, kindly let me know in the comment section
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