You have to enroll a different domain in Outlook Live than the on-premises address space or the shared address space. In this example, the domain to enroll in Outlook Live is live.contoso.edu.

To enroll the Outlook Live domain, follow these procedures:

• Enroll Your Domain with Microsoft Live@edu   Enroll the live.contoso.edu domain, and use an MX record to prove domain ownership.
  
• Manage IP safelists   In the Live@edu Service Management Portal, click Mail delivery tab, and then click Manage IP safelists. Identify all the servers in the on-premises messaging system that are used to deliver e-mail to Outlook Live. These servers can be categorized as follows:
  
  • Internal mail servers   These servers contain mailboxes or are used for routing e-mail messages internally without being exposed to the Internet.
    
  • Gateway servers   These servers are connected to the Internet and are used to deliver e-mail to Outlook Live.
    Note   You don't need a dedicated gateway server that only delivers e-mail to Outlook Live. If the gateway servers deliver e-mail to Outlook Live and to the Internet at large, they are considered gateway servers. If the on-premises messaging system uses a dedicated gateway server to deliver e-mail to Outlook Live only, that server is considered an internal mail server.
    
• Test mail flow   Although senders on the Internet won't use the @live.contoso.edu e-mail addresses, we recommend that you test the Outlook Live domain to verify that it is functioning correctly. To do this, create one or more test user accounts and use them to test mail flow.
  

After you enroll the Outlook Live domain, add the shared address space as an accepted domain so you can set the primary address for Outlook Live accounts in the shared address space. In this example, the shared address space is contoso.edu.

For instructions, see Create Accepted Domains.

The MX record for contoso.edu is already in use by the on-premises messaging system. Therefore, when you create the accepted domain for contoso.edu, be sure to use a CNAME record to prove domain ownership. For instructions, see Prove Domain Ownership.

If you don't configure the share address space @contoso.edu as an internal relay domain, e-mail sent from students in Outlook Live to faculty and staff with @contoso.edu addresses in the on-premises messaging system won't be delivered, and NDRs will be generated.

To configure @contoso.edu as an internal relay domain, use Windows PowerShell. To learn how to install and configure Windows PowerShell and connect to Outlook Live, see Use Windows PowerShell.

Run the following command after you have connected to the Outlook Live server-side session:

Set-AcceptedDomain <shared address space> -DomainType InternalRelay

For our example, contoso.edu is the shared address space. Run the following command:

Set-AcceptedDomain contoso.edu -DomainType InternalRelay

Use one of the following methods to create new accounts and set the primary e-mail address in the shared address space.

• Create new Windows Live IDs in the @contoso.edu address space
  To create individual accounts in the Web management interface, see Create a New Mailbox. When you create an account, select the shared address space @contoso.edu, not the default Outlook Live address space @live.contoso.edu. When you select a Windows Live ID for the account in the contoso.edu domain, the primary e-mail address of the account is also set in the @contoso.edu domain.
  
• Update the primary address of existing Windows Live IDs in the @live.contoso.edu address space to the @contoso.edu address space
  If you've already created many accounts in your Outlook Live domain before you decided you wanted a shared address space, you need to update to primary address for those accounts to the @contoso.edu address space. The Windows Live IDs of your Outlook Live users can be in a completely different domain that their primary e-mail addresses. For more information, see Change the Primary E-mail Address on a User's Account.
  

A note about bulk operations   You can use the CSV_Parser Windows PowerShell script to create new accounts and set the primary e-mail address at the same time, or to update the primary e-mail address of existing accounts. Here's how: Create and Configure Recipients with the CSV_Parser.ps1 script.

You have to configure your on-premises messaging system to correctly forward e-mail to recipients in Outlook Live. The process for doing this depends on the software used in the on-premises messaging system. Here are some possibilities:

• Microsoft Exchange Server 2007   See How to Configure Exchange 2007 to Route Messages for a Shared Address Space. Note that, in this case, the second messaging system has to be authoritative for the shared address space. In the Contoso University example, the first messaging system, which is the on-premises Exchange 2007 organization, is authoritative for the shared address space @contoso.edu. Therefore, to make the shared address space work, you have to do the following in the on-premises Exchange 2007 organization:
  
  • Create an internal relay domain for the Outlook Live domain live.contoso.edu and create a Send connector for the @live.contoso.edu address space that uses smart host routing, instead of DNS routing. The smart host value is the MX record for your Outlook Live domain from the Domain Settings page of the Windows Live Admin Center. For more information, see Use an MX Record to Direct Mail to Your Domain.
    
  • Configure a solution to convert @contoso.edu addresses into @live.contoso.edu addresses for Outlook Live users. Learn more:
    • Managing Mail Contacts and Mail Users
    • Managing Transport Rules
    • Planning for Address Rewriting
    Note   If you want the Outlook Live users to access their mailboxes using Microsoft Office Outlook 2007, the Outlook Live users must be represented in the on-premises global address list as mail contacts or mail users. The CNAME autodiscover record that is required for Outlook 2007 clients to access their mailboxes points to the on-premises Exchange organization. In the Contoso University example, the CNAME record autodiscover.contoso.edu points to autodiscover.outlook.com. For more information about the CNAME autodiscover record, see Recommended DNS Record Updates for Outlook Live.
    
• Exchange Server 2003   See Microsoft Knowledge Base article 321721, "How to share an SMTP address space in Exchange 2000 Server or in Exchange Server 2003". In that article, Method 2 most closely resembles the Contoso University example. Method 1 requires the second messaging system to be authoritative for the shared address space. In the Contoso University example, the first e-mail system, which is the on-premises Exchange Server 2003 organization, is authoritative for the shared address space @contoso.edu.
  
• Zimbra   See Split Domain.
  
• Other messaging systems   You're on your own. Most likely, you'll have to configure some kind of connector or smart host to route e-mail for recipients in Outlook Live without creating mail routing loops for nonexistent recipients. Consult the documentation for your on-premises messaging system.