How to Fix Azure Event Grid Entra Authentication issue for ACS and Dynamics 365 integrated Webhooks

This is a useful integration edge case. The part I would validate first is whether the receiving webhook endpoint supports the exact Event Grid validation and authentication flow you are configuring.

For Event Grid webhooks, the initial subscription validation handshake is often where things break. If Entra authentication is enabled, the endpoint still needs to handle the validation event correctly and return the expected validation response. I would also confirm the app registration/audience, token issuer, allowed tenant, and whether Dynamics or ACS is expecting a different identity model than the one Event Grid is using.

For troubleshooting, capture the delivery attempt details in Event Grid metrics/logs and compare the HTTP status for validation versus normal event delivery. That usually separates auth failures from payload/handler issues.