Exchange Hybrid Mode and Dynamic Distribution Groups

Exchange Online/Office 365 does not have dynamic distribution groups. So, in a hybrid deployment, it's not possible to synchronize dynamic distribution groups from on-premises to Office 365. There are two work arounds:

Option 1
If you like scripting, you can create a script that updates the membership of a normal distribution group. You'll need to run the script as a scheduled task. The main benefit to this method is that it is contained entirely within the on-premises environment.

There are two drawbacks to this method:

1. It's not actually dynamic, so there is a lag time from when new members are created and when they're added to the group.
2. It's relatively complex to create the script and schedule a powershell script to run as a task with the correct snap-ins loaded.

Option 2
My preferred option for this is to create a contact in Office 365 that points at the dynamic distribution group on-premises. This allows you to continue using true dynamic distribution groups on your on-premises environment and give Office 365 users the ability to send messages to them.

When you create the dynamic distribution group you need to select the following recipient types:

• Users with Exchange Mailboxes. These are your on premises users.
• Users with external e-mail addresses. These are your office 365 users.

After you create the dynamic distribution group, collect the following information from it:

• Display Name
• Alias
• Email address (not the mail.onmicrosoft.com address)

Now use the Office 365 admin console to create a mail contact (do not create on-premises contact and sync it) with the following attributes:

• Display Name: same as dynamic distribution group
• Alias: same as dynamic distribution group
• External email address: same as email address from dynamic distribution group

From a management perspective, this is a bit of a pain because you need to remember to manually create an extra contact in Office 365. However, I still think this is the easiest way to get it going.

You can't create the contact locally and sync it for two reasons:

1. You can duplicate the same display name on two objects. So, you'll end up with two objects using the same display name. This will be confusing for on-premises users who will see both objects.
2. You can't duplicate the external email address for a contact with the actual email address for the dynamic distribution group. This makes it not just a bad idea, but a technical impossibility.