Azure PowerShell - Enable customer-managed keys with server-side encryption - managed disks

Applies to: ✔️ Windows VMs ✔️ Flexible scale sets ✔️ Uniform scale sets

Azure Disk Storage allows you to manage your own keys when using server-side encryption (SSE) for managed disks, if you choose. For conceptual information on SSE with customer-managed keys, and other managed disk encryption types, see the Customer-managed keys section of our disk encryption article.


For now, customer-managed keys have the following restrictions:

  • If this feature is enabled for a disk with incremental snapshots, it can't be disabled on that disk or its snapshots. To work around this, copy all the data to an entirely different managed disk that isn't using customer-managed keys. You can do that with either the Azure CLI or the Azure PowerShell module.
  • Only software and HSM RSA keys of sizes 2,048-bit, 3,072-bit and 4,096-bit are supported, no other keys or sizes.
    • HSM keys require the premium tier of Azure Key vaults.
  • For Ultra Disks and Premium SSD v2 disks only: Snapshots created from disks that are encrypted with server-side encryption and customer-managed keys must be encrypted with the same customer-managed keys.
  • Most resources related to your customer-managed keys (disk encryption sets, VMs, disks, and snapshots) must be in the same subscription and region.
    • Azure Key Vaults may be used from a different subscription but must be in the same region as your disk encryption set. As a preview, you can use Azure Key Vaults from different Microsoft Entra tenants.
  • Disks encrypted with customer-managed keys can only move to another resource group if the VM they are attached to is deallocated.
  • Disks, snapshots, and images encrypted with customer-managed keys can't be moved between subscriptions.
  • Managed disks currently or previously encrypted using Azure Disk Encryption can't be encrypted using customer-managed keys.
  • Can only create up to 5000 disk encryption sets per region per subscription.
  • For information about using customer-managed keys with shared image galleries, see Preview: Use customer-managed keys for encrypting images.

Set up an Azure Key Vault and DiskEncryptionSet optionally with automatic key rotation

To use customer-managed keys with SSE, you must set up an Azure Key Vault and a DiskEncryptionSet resource.

  1. Make sure that you have installed latest Azure PowerShell version, and you are signed in to an Azure account in with Connect-AzAccount

  2. Create an instance of Azure Key Vault and encryption key.

    When creating the Key Vault instance, you must enable purge protection. Purge protection ensures that a deleted key cannot be permanently deleted until the retention period lapses. These settings protect you from losing data due to accidental deletion. These settings are mandatory when using a Key Vault for encrypting managed disks.

    $keyVault = New-AzKeyVault -Name $keyVaultName `
    -ResourceGroupName $ResourceGroupName `
    -Location $LocationName `
    $key = Add-AzKeyVaultKey -VaultName $keyVaultName `
          -Name $keyName `
          -Destination $keyDestination 
  3. Create an instance of a DiskEncryptionSet. You can set RotationToLatestKeyVersionEnabled equal to $true to enable automatic rotation of the key. When you enable automatic rotation, the system will automatically update all managed disks, snapshots, and images referencing the disk encryption set to use the new version of the key within one hour.

    $desConfig=New-AzDiskEncryptionSetConfig -Location $LocationName `
        -SourceVaultId $keyVault.ResourceId `
        -KeyUrl $key.Key.Kid `
        -IdentityType SystemAssigned `
        -RotationToLatestKeyVersionEnabled $false
    $des=New-AzDiskEncryptionSet -Name $diskEncryptionSetName `
           -ResourceGroupName $ResourceGroupName `
           -InputObject $desConfig
  4. Grant the DiskEncryptionSet resource access to the key vault.


    It may take few minutes for Azure to create the identity of your DiskEncryptionSet in your Microsoft Entra ID. If you get an error like "Cannot find the Active Directory object" when running the following command, wait a few minutes and try again.

    Set-AzKeyVaultAccessPolicy -VaultName $keyVaultName -ObjectId $des.Identity.PrincipalId -PermissionsToKeys wrapkey,unwrapkey,get

Use a key vault in a different subscription

Alternatively, you can manage your Azure Key Vaults centrally from a single subscription, and use the keys stored in the Key Vault to encrypt managed disks and snapshots in other subscriptions in your organization. This allows your security team to enforce and easily manage a robust security policy to a single subscription.


For this configuration, both your Key Vault and your disk encryption set must be in the same region and be using the same tenant.

The following script is an example of how you would configure a disk encryption set to use a key from a Key Vault in a different subscription, but same region:



Set-AzContext -Subscription $sourceSubscriptionId

$key = Get-AzKeyVaultKey -VaultName $sourceKeyVaultName -Name $sourceKeyName

Set-AzContext -Subscription $targetSubscriptionId

$desConfig=New-AzDiskEncryptionSetConfig -Location $location `
-KeyUrl $key.Key.Kid `
-IdentityType SystemAssigned `
-RotationToLatestKeyVersionEnabled $false

$des=New-AzDiskEncryptionSet -Name $targetDiskEncryptionSetName `
-ResourceGroupName $targetResourceGroupName `
-InputObject $desConfig


Now that you've created and configured these resources, you can use them to secure your managed disks. The following are example scripts, each with a respective scenario, that you can use to secure your managed disks.

Create a VM using a Marketplace image, encrypting the OS and data disks with customer-managed keys

Copy the script, replace all of the example values with your own parameters, and then run it.

$VMLocalAdminUser = "yourVMLocalAdminUserName"
$VMLocalAdminSecurePassword = ConvertTo-SecureString <password> -AsPlainText -Force
$LocationName = "yourRegion"
$ResourceGroupName = "yourResourceGroupName"
$ComputerName = "yourComputerName"
$VMName = "yourVMName"
$VMSize = "yourVMSize"
$NetworkName = "yourNetworkName"
$NICName = "yourNICName"
$SubnetName = "yourSubnetName"
$SubnetAddressPrefix = ""
$VnetAddressPrefix = ""
$SingleSubnet = New-AzVirtualNetworkSubnetConfig -Name $SubnetName -AddressPrefix $SubnetAddressPrefix
$Vnet = New-AzVirtualNetwork -Name $NetworkName -ResourceGroupName $ResourceGroupName -Location $LocationName -AddressPrefix $VnetAddressPrefix -Subnet $SingleSubnet
$NIC = New-AzNetworkInterface -Name $NICName -ResourceGroupName $ResourceGroupName -Location $LocationName -SubnetId $Vnet.Subnets[0].Id
$Credential = New-Object System.Management.Automation.PSCredential ($VMLocalAdminUser, $VMLocalAdminSecurePassword);
$VirtualMachine = New-AzVMConfig -VMName $VMName -VMSize $VMSize
$VirtualMachine = Set-AzVMOperatingSystem -VM $VirtualMachine -Windows -ComputerName $ComputerName -Credential $Credential -ProvisionVMAgent -EnableAutoUpdate
$VirtualMachine = Add-AzVMNetworkInterface -VM $VirtualMachine -Id $NIC.Id
$VirtualMachine = Set-AzVMSourceImage -VM $VirtualMachine -PublisherName 'MicrosoftWindowsServer' -Offer 'WindowsServer' -Skus '2012-R2-Datacenter' -Version latest

$diskEncryptionSet=Get-AzDiskEncryptionSet -ResourceGroupName $ResourceGroupName -Name $diskEncryptionSetName

$VirtualMachine = Set-AzVMOSDisk -VM $VirtualMachine -Name $($VMName +"_OSDisk") -DiskEncryptionSetId $diskEncryptionSet.Id -CreateOption FromImage

$VirtualMachine = Add-AzVMDataDisk -VM $VirtualMachine -Name $($VMName +"DataDisk1") -DiskSizeInGB 128 -StorageAccountType Premium_LRS -CreateOption Empty -Lun 0 -DiskEncryptionSetId $diskEncryptionSet.Id 
New-AzVM -ResourceGroupName $ResourceGroupName -Location $LocationName -VM $VirtualMachine -Verbose

Create an empty disk encrypted using server-side encryption with customer-managed keys and attach it to a VM

Copy the script, replace all of the example values with your own parameters, and then run it.

$vmName = "yourVMName"
$LocationName = "westcentralus"
$ResourceGroupName = "yourResourceGroupName"
$diskName = "yourDiskName"
$diskSKU = "Premium_LRS"
$diskSizeinGiB = 30
$diskLUN = 1

$vm = Get-AzVM -Name $vmName -ResourceGroupName $ResourceGroupName 

$diskEncryptionSet=Get-AzDiskEncryptionSet -ResourceGroupName $ResourceGroupName -Name $diskEncryptionSetName

$vm = Add-AzVMDataDisk -VM $vm -Name $diskName -CreateOption Empty -DiskSizeInGB $diskSizeinGiB -StorageAccountType $diskSKU -Lun $diskLUN -DiskEncryptionSetId $diskEncryptionSet.Id 

Update-AzVM -ResourceGroupName $ResourceGroupName -VM $vm

Encrypt existing managed disks

Your existing disks must not be attached to a running VM in order for you to encrypt them using the following script:

$rgName = "yourResourceGroupName"
$diskName = "yourDiskName"
$diskEncryptionSetName = "yourDiskEncryptionSetName"
$diskEncryptionSet = Get-AzDiskEncryptionSet -ResourceGroupName $rgName -Name $diskEncryptionSetName
New-AzDiskUpdateConfig -EncryptionType "EncryptionAtRestWithCustomerKey" -DiskEncryptionSetId $diskEncryptionSet.Id | Update-AzDisk -ResourceGroupName $rgName -DiskName $diskName

Encrypt an existing virtual machine scale set (uniform orchestration mode) with SSE and customer-managed keys

This script will work for scale sets in uniform orchestration mode only. For scale sets in flexible orchestration mode, follow the Encrypt existing managed disks for each VM.

Copy the script, replace all the example values with your own parameters, and then run it:

#set variables 
$vmssname = "name of the vmss that is already created"
$diskencryptionsetname = "name of the diskencryptionset already created"
$vmssrgname = "vmss resourcegroup name"
$diskencryptionsetrgname = "diskencryptionset resourcegroup name"

#get vmss object and create diskencryptionset object attach to vmss os disk
$ssevmss = get-azvmss -ResourceGroupName $vmssrgname -VMScaleSetName $vmssname
$ssevmss.VirtualMachineProfile.StorageProfile.OsDisk.ManagedDisk.DiskEncryptionSet = New-Object -TypeName Microsoft.Azure.Management.Compute.Models.DiskEncryptionSetParameters

#get diskencryption object and retrieve the resource id
$des = Get-AzDiskEncryptionSet -ResourceGroupName $diskencryptionsetrgname -Name $diskencryptionsetname
write-host "the diskencryptionset resource id is:" $des.Id

#associate DES resource id to os disk and update vmss 
$ = $des.Id
$ssevmss | update-azvmss

Create a virtual machine scale set using a Marketplace image, encrypting the OS and data disks with customer-managed keys

Copy the script, replace all of the example values with your own parameters, and then run it.


Starting November 2023, VM scale sets created using PowerShell and Azure CLI will default to Flexible Orchestration Mode if no orchestration mode is specified. For more information about this change and what actions you should take, go to Breaking Change for VMSS PowerShell/CLI Customers - Microsoft Community Hub

$VMLocalAdminUser = "yourLocalAdminUser"
$VMLocalAdminSecurePassword = ConvertTo-SecureString Password@123 -AsPlainText -Force
$LocationName = "westcentralus"
$ResourceGroupName = "yourResourceGroupName"
$ComputerNamePrefix = "yourComputerNamePrefix"
$VMScaleSetName = "yourVMSSName"
$VMSize = "Standard_DS3_v2"
$NetworkName = "yourVNETName"
$SubnetName = "yourSubnetName"
$SubnetAddressPrefix = ""
$VnetAddressPrefix = ""
$SingleSubnet = New-AzVirtualNetworkSubnetConfig -Name $SubnetName -AddressPrefix $SubnetAddressPrefix

$Vnet = New-AzVirtualNetwork -Name $NetworkName -ResourceGroupName $ResourceGroupName -Location $LocationName -AddressPrefix $VnetAddressPrefix -Subnet $SingleSubnet

$ipConfig = New-AzVmssIpConfig -Name "myIPConfig" -SubnetId $Vnet.Subnets[0].Id 

$VMSS = New-AzVmssConfig -Location $LocationName -SkuCapacity 2 -SkuName $VMSize -UpgradePolicyMode 'Automatic' -OrchestrationMode 'Uniform'

$VMSS = Add-AzVmssNetworkInterfaceConfiguration -Name "myVMSSNetworkConfig" -VirtualMachineScaleSet $VMSS -Primary $true -IpConfiguration $ipConfig

$diskEncryptionSet=Get-AzDiskEncryptionSet -ResourceGroupName $ResourceGroupName -Name $diskEncryptionSetName

# Enable encryption at rest with customer managed keys for OS disk by setting DiskEncryptionSetId property 

$VMSS = Set-AzVmssStorageProfile $VMSS -OsDiskCreateOption "FromImage" -DiskEncryptionSetId $diskEncryptionSet.Id -ImageReferenceOffer 'WindowsServer' -ImageReferenceSku '2012-R2-Datacenter' -ImageReferenceVersion latest -ImageReferencePublisher 'MicrosoftWindowsServer'

$VMSS = Set-AzVmssOsProfile $VMSS -ComputerNamePrefix $ComputerNamePrefix -AdminUsername $VMLocalAdminUser -AdminPassword $VMLocalAdminSecurePassword

# Add a data disk encrypted at rest with customer managed keys by setting DiskEncryptionSetId property 

$VMSS = Add-AzVmssDataDisk -VirtualMachineScaleSet $VMSS -CreateOption Empty -Lun 1 -DiskSizeGB 128 -StorageAccountType Premium_LRS -DiskEncryptionSetId $diskEncryptionSet.Id

$Credential = New-Object System.Management.Automation.PSCredential ($VMLocalAdminUser, $VMLocalAdminSecurePassword);

New-AzVmss -VirtualMachineScaleSet $VMSS -ResourceGroupName $ResourceGroupName -VMScaleSetName $VMScaleSetName

Change the key of a DiskEncryptionSet to rotate the key for all the resources referencing the DiskEncryptionSet

Copy the script, replace all of the example values with your own parameters, and then run it.


$keyVault = Get-AzKeyVault -VaultName $keyVaultName -ResourceGroupName $ResourceGroupName

$keyVaultKey = Get-AzKeyVaultKey -VaultName $keyVaultName -Name $keyName

Update-AzDiskEncryptionSet -Name $diskEncryptionSetName -ResourceGroupName $ResourceGroupName -SourceVaultId $keyVault.ResourceId -KeyUrl $keyVaultKey.Id

Find the status of server-side encryption of a disk


$disk=Get-AzDisk -ResourceGroupName $ResourceGroupName -DiskName $DiskName


Customer-managed keys rely on managed identities for Azure resources, a feature of Microsoft Entra ID. When you configure customer-managed keys, a managed identity is automatically assigned to your resources under the covers. If you subsequently move the subscription, resource group, or managed disk from one Microsoft Entra directory to another, the managed identity associated with the managed disks is not transferred to the new tenant, so customer-managed keys may no longer work. For more information, see Transferring a subscription between Microsoft Entra directories.

Next steps