How to fix: azure identity (defaultAzureCredential())

Question

How to fix: azure identity (defaultAzureCredential())

Maarten van Dun 20

When running my application locally.
I use the function DefaultAzureCredential().
When i start my application i get these logs:
2025-08-06 15:11:58,055 - src.utils.startup - INFO - Starting application initialization...

2025-08-06 15:11:58,055 - src.utils.startup - INFO - Creating Azure AI client...

2025-08-06 15:11:58,057 - azure.identity.aio._credentials.environment - INFO - No environment configuration found.

2025-08-06 15:11:58,077 - azure.identity.aio._credentials.managed_identity - INFO - ManagedIdentityCredential will use Azure Arc managed identity

2025-08-06 15:11:58,084 - src.utils.startup - INFO - Azure AI client created successfully

On my pc i 'use Azrue Arc managed identity'. On my colleagues pc it doesn't mention Arc at all (what is was before on my pc also)

when i use the function: AzureCliCredential() It works locally but this is ofc not ready to be deployed.
What could be the issue here? Is it something with my pc? Something wrong with the default function?

Vinod Pittala 6,135 Reputation points Microsoft External Staff Moderator

2025-08-06T16:15:23.1733333+00:00

Hello Maarten van Dun,

It would be helpful if you could provide clarification on TP's response to help you further troubleshoot and looking forward to resolve this issue.

I will look forward to your clarification.

Thanks
Naveena Patlolla 4,805 Reputation points Microsoft External Staff Moderator

2025-08-07T07:29:12.3966667+00:00

Hello Maarten van Dun,
Was the above solution helpful, or do you need any further assistance?

Accepted answer

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Your answer

Vinod Pittala 6,135 Reputation points Microsoft External Staff Moderator

2025-08-06T16:15:23.1733333+00:00

Hello Maarten van Dun,

It would be helpful if you could provide clarification on TP's response to help you further troubleshoot and looking forward to resolve this issue.

I will look forward to your clarification.

Thanks
Naveena Patlolla 4,805 Reputation points Microsoft External Staff Moderator

2025-08-07T07:29:12.3966667+00:00

Hello Maarten van Dun,
Was the above solution helpful, or do you need any further assistance?

Answer 1

TP 131.6K Volunteer Moderator

Hi Maarten,

Is your local PC onboarded to Azure Arc? If you navigate to Azure portal -- Azure Arc -- Azure Arc resources -- Machines, is it listed? You can use link below to get there:

https://portal.azure.com/#view/Microsoft_Azure_ArcCenterUX/ArcCenterMenuBlade/~/servers

What is your local development environment? Windows/Linux, Visual Studio or VSCode or NeoVIM or other, etc.

In terms of Identity, a machine joined to Azure Arc can use managed identity to authenticate. For example, a VM in AWS could have managed identity and code running on it could authenticate to Azure to call REST APIs. Same thing for on-premises physical server or VM.

On related note, for development under Visual Studio it has concept of "Developer account" which is method for authenticating to Azure when testing code locally. Yet another method is using service principals.

As you can see there are many potential options for configuring how it will authenticate when your code uses DefaultAzureCredential().

Are you experiencing issue or are you just wondering why your PC is behaving differently than your colleague's? Assuming the agent for Azure Arc is on your PC you could remove it if that is what you prefer.

Please click Accept Answer and upvote if the above was helpful.

Thanks.

-TP

Maarten van Dun 20 Reputation points

2025-08-07T07:39:32.9266667+00:00
Hi,

Thank you for the quick response. I found the root cause of the issue:

Azure Arc Status:

I checked the Azure portal at the provided link

My PC is NOT listed in Azure Arc resources

Local Development Environment:

OS: Windows 10

IDE: Cursor

Azure CLI: Yes, I use az login for authentication

My colleague has the same setup (Windows + Cursor + az login)

Root Cause Found:

I discovered that my machine has Azure Arc services running:

ArcProxy (Azure Arc Proxy)

GCArcService (Guest Configuration Arc Service)

My colleague's machine doesn't have these services running. This explains why DefaultAzureCredential() tries to use "Azure Arc managed identity" on my machine but not on my colleague's.

Current Issue:

My PC shows "Azure Arc managed identity" in the logs when using DefaultAzureCredential()

My colleague's PC doesn't show this message

Using AzureCliCredential() works for me, but DefaultAzureCredential() doesn't

Questions:

Should I disable/remove the Azure Arc services on my development machine to get consistent behavior with my colleague?

What's the recommended approach for local development - should we standardize on having Arc services or not having them?

Is there a way to configure DefaultAzureCredential() to prioritize Azure CLI credentials over Arc managed identity for local development?

The main concern is ensuring our team can have consistent local development experience while maintaining proper authentication for production deployments.

Thank you for your help!

Best regards,

MaartenThank you for the quick response. I found the root cause of the issue:

Azure Arc Status:

I checked the Azure portal at the provided link

My PC is NOT listed in Azure Arc resources

Local Development Environment:

OS: Windows 10

IDE: Cursor (based on VS Code)

Azure CLI: Yes, I use az login for authentication

My colleague has the same setup (Windows + Cursor + az login)

Root Cause Found:

I discovered that my machine has Azure Arc services running:

ArcProxy (Azure Arc Proxy)

GCArcService (Guest Configuration Arc Service)

My colleague's machine doesn't have these services running. This explains why DefaultAzureCredential() tries to use "Azure Arc managed identity" on my machine but not on my colleague's.

Current Issue:

My PC shows "Azure Arc managed identity" in the logs when using DefaultAzureCredential()

My colleague's PC doesn't show this message

Using AzureCliCredential() works for me, but DefaultAzureCredential() doesn't

Questions:

Should I disable/remove the Azure Arc services on my development machine to get consistent behavior with my colleague?

What's the recommended approach for local development - should we standardize on having Arc services or not having them?

Is there a way to configure DefaultAzureCredential() to prioritize Azure CLI credentials over Arc managed identity for local development?

Thank you for your help!

Best regards,

Maarten
TP 131.6K Reputation points Volunteer Moderator

2025-08-07T10:28:08.4+00:00

Hi Maarten,

Based on your comment it seems you have Azure Arc agent installed, but it may not be connected to anything which means authentication requests will fail. I would recommend removing it unless you have reason to have it installed.

For future, I suggest making changes to your code to be more specific in terms of which authentication type(s) you want to use in each environment your code will run in.

For example, in simple terms you might decide your code only runs in two different environments, Development and Production (in real world you will have more). For Development you might decide you only want to use AzureCliCredential so you would use AzureCliCredential() instead of DefaultAzureCredential(). For Production you might decide to use ManagedIdentityCredential() instead of DefaultAzureCredential().

Like most things there are tradeoffs. It's nice sometimes to have additional options for those cases where you might want to quickly change configuration to use different authentication method to troubleshoot/modify behavior. On the other hand strictly limiting to few select options will help prevent weird or different behavior due to configuration change.

Please take a look at articles below. I think they cover important parts.

Authentication best practices with the Azure Identity library for .NET

https://learn.microsoft.com/en-us/dotnet/azure/sdk/authentication/best-practices

Credential chains in the Azure Identity library for .NET

https://learn.microsoft.com/en-us/dotnet/azure/sdk/authentication/credential-chains

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How to fix: azure identity (defaultAzureCredential())

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