Copilot Notebooks now supports Markdown (.md) files as grounding sources

Updated July 20, 2026: We have updated the timeline. Thank you for your patience. What and Why: Microsoft is expanding Copilot Notebooks to support Markdown (.md) files as notebook reference sources. This enhancement enables users to ground Copilot conversations in technical documentation, README files, runbooks, wikis, and AI-generated Markdown content without converting files to other formats. By broadening the types of content that can be used as notebook references, Microsoft is helping organizations make better use of existing knowledge repositories and improve the quality and relevance of Copilot-generated responses. Rollout Schedule: General Availability (Worldwide): Beginning end of July 2026 (previously mid-July); expected to complete by early August 2026 (previously late July) Impact on Your Organization: Who is affected: Users who have access to Copilot Notebooks. Teams that maintain knowledge assets in Markdown (.md) format. Organizations using Markdown-based documentation repositories such as technical runbooks, README files, and wiki exports. Platforms/Services: Microsoft Copilot Notebooks Microsoft 365 Copilot Supported SharePoint and OneDrive locations What will happen: Users will be able to add Markdown (.md) files as notebook reference sources. Copilot responses can use information contained within Markdown files as grounding content. Copilot can reference structural elements within Markdown documents. Existing Markdown-based documentation can be used without file conversion. Citations to source content continue to be available. The feature is enabled automatically. No admin configuration is required. Existing permissions and access controls continue to apply. Action Required/Recommendations: No action is required. Recommended activities: Review internal guidance for users who maintain Markdown-based documentation. Communicate the update to Copilot Notebook users. Update adoption and training materials as appropriate. Validate documentation governance processes for Markdown repositories. Compliance Considerations: Consideration Explanation Does the change alter how existing customer data is processed, stored, or accessed? Copilot Notebooks can now access and process Markdown (.md) files as grounding sources. This expands the types of content that Copilot can reference when generating responses. Does the change introduce or significantly modify AI/ML or agent capabilities that interact with or provide access to customer data? Copilot can now reason over, cite, and generate responses based on information contained in Markdown documents, extending AI grounding capabilities to an additional file format. Does the change provide end users any new way of interacting with generative AI? Users can add Markdown (.md) files directly to Copilot Notebooks and interact with Copilot using content from those files as grounding material. Does the change allow a user to enable and disable the feature themselves? Users decide whether to include Markdown files as notebook references. The capability is available by default, but usage is controlled by the user when creating or editing notebooks.