This is a Known issue with the Jan update and the Windows App, fix will be out next couple of days apparently
But in the meantime see below
What happened?
Between 00:11 UTC and 11:58 UTC on 14 January 2026, customers using Azure Virtual Desktop and Windows 365 experienced intermittent authentication failures, connection drops, and repeated retry prompts when launching or reconnecting to their virtual desktop sessions through the Windows App.
What do we know so far?
Following the January 2026 Windows Security Update (KB5074109- Windows 11 25H2 → Build 26200.7623), authentication behavior changed, increasing the volume of connection validation requests reaching the Azure Virtual Desktop platform.
As this elevated authentication traffic arrived, the platform’s core connection handling layer - which coordinates incoming user session requests and routes them to healthy session hosts - encountered a service‑side processing condition that reduced its ability to process new connection attempts. This condition caused the connection handling layer to slow down, stall session requests, and return authentication/connection errors, resulting in failed attempts and multiple retries for customers.
No customer configuration, deployment choice, or client‑side network routing contributed to this behavior.
How did we respond?
00:11 UTC on 14 January 2026 - Customer impact began.
01:00 UTC on 14 January 2026 - The issue was detected through customer reports and internal service monitoring, which showed an increase in failed connection attempts in the region.
01:37 UTC on 14 January 2026 - Contributing service condition was identified as the source of the connection failures.
01:53 UTC on 14 January 2026 - Mitigation workstream was started to stabilize the affected platform components. We applied targeted adjustments to the connection handling path, cleared stalled session attempts, and restored healthy routing to session hosts.
11:50 UTC on 14 January 2026 - We published final workaround guidance on Known Issue Rollback (KIR) instructions for customers to mitigate authentication errors and connection failures on their end. We encourage customers to refer the section below ("What customers can do to resolve this").
11:58 UTC on 14 January 2026 - After an extended period of applying mitigation workstreams and monitoring to ensure the service remained healthy, we verified that service functionality was fully restored, and no additional impact was detected.
Alongside platform‑side stabilization, we coordinated guidance to impacted customers recommending using Azure Virtual Desktop Web Client or MSRDC as validated workaround paths.
What customers can do to resolve this?
To resolve this issue, customers may consider below Known Issue Rollback (KIR) instructions for resolving authentication errors and connection failures when connecting to AVD (Azure Virtual Desktop) & W365:
Please note that it might take up to 24 hours (starting from January 14, 2026, at 03:00am PT) for the resolution to propagate automatically to consumer devices and business devices that are not managed by IT departments. Restarting your Windows device might help apply the resolution to your device more quickly.
For enterprise-managed devices managed by IT departments that have installed the affected update and encountered this issue, IT administrators can resolve it by installing and configuring the Group policy listed below. The special Group Policy can be found in Computer Configuration > Administrative Templates > .
For information on deploying and configuring this special Group Policy, please see How to use Group Policy to deploy a Known Issue Rollback.
Group Policy downloads with Group Policy name:
Download for Windows Server 2022: Windows Server 2022 KB5073457 2026011410101 Known Issue Rollback
Download for Windows Server 2025: Windows Server 2025 KB507339 2026011408001 Known Issue Rollback
Download for Windows 11 25H2 and Windows 11 24H2: Windows 11 25H2 and Windows 11 24H2 KB5074109 20260114_09501 Known Issue Rollback
Important: You will need to install and configure the Group Policy for your version of Windows to resolve this issue. You will also need to restart your device(s) to apply the group policy setting.
What happens next?
Our team will be completing an internal retrospective to understand the incident in more detail. Once that is completed, generally within 14 days, we will publish a Post Incident Review (PIR) to all impacted customers.
To get notified if a PIR is published, and/or to stay informed about future Azure service issues, make sure that you configure and maintain Azure Service Health alerts – these can trigger emails, SMS, push notifications, webhooks, and more: https://aka.ms/ash-alerts
For more information on Post Incident Reviews, refer to https://aka.ms/AzurePIRs
The impact times above represent the full incident duration, so are not specific to any individual customer. Actual impact to service availability may vary between customers and resources – for guidance on implementing monitoring to understand granular impact: https://aka.ms/AzPIR/Monitoring
Finally, for broader guidance on preparing for cloud incidents, refer to https://aka.ms/