The short version: Dataverse for Teams is the free relational database hiding inside most Microsoft 365 licences, and it's very good until it very suddenly isn't. Each Dataverse for Teams environment gets 2GB, roughly a million rows, and no way to buy more. A tenant gets five free environments plus one per twenty M365 licences. Know the four walls before you build against them, because three of them only show up in production.
Moving data into either flavour of Dataverse, source by source, is covered on the Power Platform migration hub.
The free tier nobody knows they own
If your firm has Microsoft 365, you almost certainly already own this: a real relational database, per team, that canvas apps, flows and Copilot Studio agents inside Teams can build on, at no extra licence cost. For a 100-person NZ firm that's ten free environments before anyone pays a cent. It's the answer I give most often when someone asks whether they need SharePoint lists or Dataverse for a small internal tool that lives where the team already works.
The four walls, in the order they hit
| Wall | The limit, per Microsoft's docs (checked August 2026) | How it shows up |
|---|---|---|
| Storage | 2GB combined database and file per team, about 1M rows, part reserved for system use, not extendable | Photos and file attachments burn it fastest; a photo-heavy inspection app can hit 2GB years before a million rows |
| At the cap | Existing apps keep working with full create-read-update-delete; nothing new can be created or installed | The day someone can't add a table is the day the upgrade conversation starts, mid-project |
| Tenant ceiling | 5 environments + 1 per 20 eligible M365 licences, max 19.5TB tenant-wide | Enthusiastic teams create environments; the tenant hits its count and new teams get nothing |
| Capability | No API access, plug-ins, component framework, model-driven apps, advanced search, mobile offline, AI Builder, desktop flows or custom connectors | The one that catches developers: nothing outside Teams can talk to the data programmatically |
The licensing trap rides along too: premium connectors keep their usual rule inside Dataverse for Teams, so one premium connector in an app means every user of that app needs a paid Power Apps licence.
The upgrade is a one-way door
When an environment outgrows the walls, an admin can upgrade it to full Dataverse from the admin centre. Three things about that door: it needs the tenant to hold at least as much spare Dataverse capacity as the environment's size before it opens, the environment's lifecycle detaches from the team afterwards (deleting the team no longer deletes the data, which is usually what you want), and there's no walking it back. Full Dataverse then brings the professional layer, API, plug-ins, model-driven apps, offline, and a single base licence carries 10GB of relational storage plus 20GB of file storage to grow into, what that capacity actually holds for a firm under 20 staff is worked through in the Dataverse storage limits post. The upgrade mechanics themselves, what licence it needs and exactly why it can't be undone, are covered in full in upgrading Dataverse for Teams to Dataverse.
Planning rule I use: if the data will ever need to be reached from outside Teams, by a website, an integration, an agent, a report your accountant runs, start on full Dataverse or plan the upgrade into the budget. The missing API bites long before the 2GB does.
Where this sits in 2026
Worth knowing when you're deciding where data should live this year: the interesting Dataverse investment is all landing on the full platform, not the Teams tier. The MCP server that lets AI agents query business tables went GA in December 2025, agent identities in Entra are in public preview, and the Work IQ integration is putting Dataverse data inside Microsoft 365 Copilot. Dataverse for Teams gets none of it. The gap between the free tier and the real thing is widening, and it's widening in exactly the direction NZ firms are starting to ask about, covered properly in the 2026 round-up.
Questions about the Dataverse for Teams limits
What are the Dataverse for Teams limits?
Each team gets one environment capped at 2GB of combined database and file storage, which Microsoft says typically holds about a million rows. A tenant gets 5 environments plus one more for every 20 eligible Microsoft 365 licences, to a ceiling of 19.5TB across the tenant. The 2GB cannot be extended; the only way past it is upgrading that environment to full Dataverse.
What happens when a Dataverse for Teams environment hits 2GB?
Existing apps, flows and chatbots keep working, including creating and editing records. What stops is new development: no new apps, flows, chatbots or tables can be created or installed in that environment until storage drops or the environment is upgraded to full Dataverse.
What does full Dataverse have that Dataverse for Teams doesn't?
The professional layer: API access, plug-ins, the component framework, model-driven apps, advanced search, mobile offline, paginated reports, AI Builder, desktop flows and custom connectors are all absent from Dataverse for Teams. It's a capable free tier for apps that live inside Teams, and a deliberate ceiling for everything beyond that.
Get the placement call right first
Where the data lives is the one decision that's expensive to reverse. If you're weighing a Teams-tier build against full Dataverse or SharePoint, book a free 30-minute call; the shape of your data and who needs to reach it usually decides in minutes.