Updated: May 2022

So I'm struggling with this issue. I can provide the answer to this question for enterprise accounts with access to Exchange Online and Microsoft Admin Center.

TLDR: Go to the admin center and select the user you want to send mail to. Then after setting up "Authenticated SMTP" look at the settings after "Email" and "Email Application" and just enable it.

Still not working? I've got you covered, here's how I got it to work completely.

1. Using PHP Composer actually saves a lot of work.
2. Replace your code with my code and change it after testing

SMTPDebug = SMTP::DEBUG_off;

//SMTP
$mail = new PHPMailer(true); //important
$mail->CharSet = 'UTF-8';  //not important
$mail->isSMTP(); //important
$mail->Host = 'smtp.office365.com'; //important
$mail->Port       = 587; //important
$mail->SMTPSecure = 'tls'; //important
$mail->SMTPAuth   = true; //important, your IP get banned if not using this

//Auth
$mail->Username = 'yourname@mail.org';
$mail->Password = 'your APP password';//Steps mentioned in last are to create App password

//Set who the message is to be sent from, you need permission to that email as 'send as'
$mail->SetFrom('hosting@mail.org', 'Hosting Group Inc.'); //you need "send to" permission on that account, if dont use yourname@mail.org

//Set an alternative reply-to address
$mail->addReplyTo('no-reply@mail.com', 'First Last');

//Set who the message is to be sent to
$mail->addAddress('customer@othermail.com', 'SIMON MÜLLER');
//Set the subject line
$mail->Subject = 'PHPMailer SMTP test';
//Read an HTML message body from an external file, convert referenced images to embedded,
//convert HTML into a basic plain-text alternative body
$mail->msgHTML(file_get_contents('replace-with-file.html'), __DIR__);  //you can also use $mail->Body = "This is a body message in html" 
//Replace the plain text body with one created manually
$mail->AltBody = 'This is a plain-text message body';
//Attach an image file
//$mail->addAttachment('../../../images/phpmailer_mini.png');

//send the message, check for errors
if (!$mail->send()) {
    echo 'Mailer Error: ' . $mail->ErrorInfo;
} else {
}

3. This may look like your file and that's okay, but now comes the easy tricky part. Like Google, Microsoft has implemented a "switch" for SMTP. Just go to your admin center from your business account, or ask someone with permission to do that:

• Navigate to https://admin.microsoft.com/AdminPortal/Home#/users
• Select the user you want to send emails from
• Search for "Email Applications" under the "Email" tab and click "Manage Email Applications"
• Here you can select "Authenticated SMTP", make sure that option is checked and save the changes

5. If you use MFA, make sure to use the app password mentioned in https://stackoverflow.com/ a/61359150/14148981

6. Run script

I hope this helps someone. It took me a long time to find this option.

Get a summary of all steps for app passwords and authentication:

1. Use administrator account:

• Active Directory AD -> Properties -> Security Default: Off.
• Active Directory Portal -> Conditional Access -> Configure MFA Trusted IPs -> Allow User Application Password: Enable
• Admin Page User List -> "Multiple Authentication" for target users: Enable then force
• Manage Page User List -> User Details -> Mail -> "Manage Email Application" -> "Authenticated SMTP": Enable

2. Use user account:

• User Account Profile -> Security -> Add Login Method: Apply Password

3. PHP Mail Program Settings:

• smtp.office365.com, 587, tls, email, appPassword

@nitin's code doesn't work for me because it's missing "tls" in the SMTPSecure parameter.

This is a working version. I've also added two commented out lines that you can use if problems arise.

isSMTP();
$mail->Host = 'smtp.office365.com';
$mail->Port       = 587;
$mail->SMTPSecure = 'tls';
$mail->SMTPAuth   = true;
$mail->Username = 'somebody@somewhere.com';
$mail->Password = 'YourPassword';
$mail->SetFrom('somebody@somewhere.com', 'FromEmail');
$mail->addAddress('recipient@domain.com', 'ToEmail');
//$mail->SMTPDebug  = 3;
//$mail->Debugoutput = function($str, $level) {echo "debug level $level; message: $str";}; //$mail->Debugoutput = 'echo';
$mail->IsHTML(true);

$mail->Subject = 'Here is the subject';
$mail->Body    = 'This is the HTML message body in bold!';
$mail->AltBody = 'This is the body in plain text for non-HTML mail clients';

if(!$mail->send()) {
    echo 'Message could not be sent.';
    echo 'Mailer Error: ' . $mail->ErrorInfo;
} else {
    echo 'Message has been sent';
}