Managed Identity support now available for local Logic Apps development

Microsoft has added Managed Identity support to the Logic Apps Standard VS Code extension for local development. Developers can now use the same authentication method locally and after deployment, eliminating the need to maintain separate local authentication paths.

Requirements

The feature requires the Logic Apps Standard VS Code extension version 5.961.19 or later, bundle 1.165.52 or later, and either Azure CLI 2.51+ or the Az PowerShell module. Developers must add the WORKFLOWS_AUTHENTICATION_METHOD app setting with value managedServiceIdentity to both ./local.settings.json and ./workflow-designtime/local.settings.json, then reload the VS Code window. The setting is local-only and applies to the whole application.

Connector behavior

For managed connectors, enabling this feature removes the need for a local connection key. Developers can select "Logic Apps Managed Identity" as the authentication type, but dynamic values are not currently generated inside the designer, requiring manual entry. Service provider connectors support dynamic parameters and continue to populate values such as a fully qualified namespace for Service Bus connections.

Regardless of which identity is used, that identity must have appropriate Azure RBAC roles on target resources. If an authorization error occurs, Microsoft recommends checking role assignments first. Microsoft is seeking feedback on managed connector dynamic value scenarios through the Logic Apps Aviators community.