diff --git a/src/azure-cli-core/azure/cli/core/_identity.py b/src/azure-cli-core/azure/cli/core/_identity.py
index f8fc541f558..ceec45f02d5 100644
--- a/src/azure-cli-core/azure/cli/core/_identity.py
+++ b/src/azure-cli-core/azure/cli/core/_identity.py
@@ -86,7 +86,7 @@ def __init__(self, authority=None, tenant_id=None, client_id=None, **kwargs):
         #   - Access token
         #   - Service principal secret
         #   - Service principal certificate
-        # self._credential_kwargs['logging_enable'] = True
+        self._credential_kwargs['logging_enable'] = True
 
     def _load_msal_cache(self):
         # sdk/identity/azure-identity/azure/identity/_internal/msal_credentials.py:95
diff --git a/src/azure-cli-core/azure/cli/core/azclierror.py b/src/azure-cli-core/azure/cli/core/azclierror.py
index 297b42bf9bb..73c349c389d 100644
--- a/src/azure-cli-core/azure/cli/core/azclierror.py
+++ b/src/azure-cli-core/azure/cli/core/azclierror.py
@@ -12,6 +12,9 @@
 logger = get_logger(__name__)
 # pylint: disable=unnecessary-pass
 
+UNAUTHORIZED_MESSAGE = ("The access token has expired or been revoked due to being blocked by Continuous Access "
+                        "Evaluation. To re-authenticate, please run `az login`. "
+                        "(Silent re-authentication will be attempted in the future.)")
 
 # Error types in AzureCLI are from different sources, and there are many general error types like CLIError, AzureError.
 # Besides, many error types with different names are actually showing the same kind of error.
@@ -169,7 +172,8 @@ class BadRequestError(UserFault):
 
 class UnauthorizedError(UserFault):
     """ Unauthorized request: 401 error """
-    pass
+    def __init__(self, error_msg, recommendation=UNAUTHORIZED_MESSAGE):
+        super().__init__(error_msg, recommendation)
 
 
 class ForbiddenError(UserFault):
@@ -259,7 +263,7 @@ class RecommendationError(ClientError):
     pass
 
 
-class AuthenticationError(ServiceError):
-    """ Raised when AAD authentication fails. """
+class AuthenticationError(AzCLIError):
+    """ Raised when credential.get_token fails. """
 
 # endregion
diff --git a/src/azure-cli-core/azure/cli/core/azlogging.py b/src/azure-cli-core/azure/cli/core/azlogging.py
index d2c3fbf1064..d30af54387a 100644
--- a/src/azure-cli-core/azure/cli/core/azlogging.py
+++ b/src/azure-cli-core/azure/cli/core/azlogging.py
@@ -51,12 +51,18 @@ def __init__(self, name, cli_ctx=None):
 
     def configure(self, args):
         super(AzCliLogging, self).configure(args)
-        from knack.log import CliLogLevel
-        if self.log_level == CliLogLevel.DEBUG:
-            # As azure.core.pipeline.policies.http_logging_policy is a redacted version of
-            # azure.core.pipeline.policies._universal, disable azure.core.pipeline.policies.http_logging_policy
-            # when debug log is shown.
-            logging.getLogger("azure.core.pipeline.policies.http_logging_policy").setLevel(logging.CRITICAL)
+        if self.log_level:
+            # When invoked by pytest, configure() is skipped and log_level will not be set.
+            from knack.log import CliLogLevel
+            if self.log_level == CliLogLevel.DEBUG:
+                # As azure.core.pipeline.policies.http_logging_policy is a redacted version of
+                # azure.core.pipeline.policies._universal, disable azure.core.pipeline.policies.http_logging_policy
+                # when debug log is shown.
+                logging.getLogger("azure.core.pipeline.policies.http_logging_policy").setLevel(logging.CRITICAL)
+
+            if self.log_level <= CliLogLevel.WARNING:
+                # Disable warnings from Azure Identity
+                logging.getLogger("azure.identity").setLevel(logging.CRITICAL)
 
     def get_command_log_dir(self):
         return self.command_log_dir
diff --git a/src/azure-cli-core/azure/cli/core/cloud.py b/src/azure-cli-core/azure/cli/core/cloud.py
index 4a555a4fdf2..d61ea7c0be1 100644
--- a/src/azure-cli-core/azure/cli/core/cloud.py
+++ b/src/azure-cli-core/azure/cli/core/cloud.py
@@ -298,7 +298,7 @@ def from_json(cls, json_str):
     'AzureCloud',
     endpoints=CloudEndpoints(
         management='https://management.core.windows.net/',
-        resource_manager='https://management.azure.com/',
+        resource_manager='https://eastus2euap.management.azure.com/',
         sql_management='https://management.core.windows.net:8443/',
         batch_resource_id='https://batch.core.windows.net/',
         gallery='https://gallery.azure.com/',
diff --git a/src/azure-cli-core/azure/cli/core/credential.py b/src/azure-cli-core/azure/cli/core/credential.py
index b843a9303f6..b67dee56cb2 100644
--- a/src/azure-cli-core/azure/cli/core/credential.py
+++ b/src/azure-cli-core/azure/cli/core/credential.py
@@ -7,9 +7,11 @@
 
 import requests
 from azure.cli.core._identity import resource_to_scopes
+from azure.cli.core.azclierror import AuthenticationError
 from azure.cli.core.util import in_cloud_console
 from azure.core.credentials import AccessToken
 from azure.core.exceptions import ClientAuthenticationError
+from azure.identity import AuthenticationRequiredError
 
 from knack.log import get_logger
 from knack.util import CLIError
@@ -48,27 +50,30 @@ def _get_token(self, scopes=None, **kwargs):
             if in_cloud_console():
                 CredentialAdaptor._log_hostname()
             raise err
+
+        except AuthenticationRequiredError as err:
+            refined_message = "Interactive authentication is required to get a token."
+            refined_message = refined_message + "\n\nError detail:\n" + err.error_details
+
+            recommendation = "The refresh token has been revoked due to password change or " \
+                             "being blocked by Conditional Access policy. " \
+                             "To re-authenticate, " +\
+                             ("please refresh Azure Portal." if in_cloud_console() else "please run `az login`.")
+            raise AuthenticationError(refined_message, recommendation) from err
+
         except ClientAuthenticationError as err:
             # pylint: disable=no-member
             if in_cloud_console():
                 CredentialAdaptor._log_hostname()
 
-            err = getattr(err, 'message', None) or ''
-            if 'authentication is required' in err:
-                raise CLIError("Authentication is migrated to Microsoft identity platform (v2.0). {}".format(
-                    "Please run 'az login' to login." if not in_cloud_console() else ''))
-            if 'AADSTS70008' in err:  # all errors starting with 70008 should be creds expiration related
+            err_message = getattr(err, 'error_details', None) or ''
+            if 'AADSTS70008' in err_message:  # all errors starting with 70008 should be creds expiration related
                 raise CLIError("Credentials have expired due to inactivity. {}".format(
                     "Please run 'az login'" if not in_cloud_console() else ''))
-            if 'AADSTS50079' in err:
+            if 'AADSTS50079' in err_message:
                 raise CLIError("Configuration of your account was changed. {}".format(
                     "Please run 'az login'" if not in_cloud_console() else ''))
-            if 'AADSTS50173' in err:
-                raise CLIError("The credential data used by CLI has been expired because you might have changed or "
-                               "reset the password. {}".format(
-                                   "Please clear browser's cookies and run 'az login'"
-                                   if not in_cloud_console() else ''))
-            raise CLIError(err)
+            raise CLIError(err_message)
         except requests.exceptions.SSLError as err:
             from .util import SSLERROR_TEMPLATE
             raise CLIError(SSLERROR_TEMPLATE.format(str(err)))
diff --git a/src/azure-cli-core/setup.py b/src/azure-cli-core/setup.py
index 223a4852f19..5274be01ccd 100644
--- a/src/azure-cli-core/setup.py
+++ b/src/azure-cli-core/setup.py
@@ -53,7 +53,7 @@
     'humanfriendly>=4.7,<10.0',
     'jmespath',
     'knack==0.8.0rc2',
-    'azure-identity==1.5.0b2',
+    'azure-identity==1.6.0b1',
     # Dependencies of the vendored subscription SDK
     # https://github.com/Azure/azure-sdk-for-python/blob/ab12b048ddf676fe0ccec16b2167117f0609700d/sdk/resources/azure-mgmt-resource/setup.py#L82-L86
     'msrest>=0.5.0',
diff --git a/src/azure-cli-testsdk/azure/cli/testsdk/base.py b/src/azure-cli-testsdk/azure/cli/testsdk/base.py
index 62685d62613..a93a1b69b1f 100644
--- a/src/azure-cli-testsdk/azure/cli/testsdk/base.py
+++ b/src/azure-cli-testsdk/azure/cli/testsdk/base.py
@@ -214,6 +214,8 @@ def __init__(self, method_name):
         self.kwargs = {}
         self.test_resources_count = 0
 
+        patch_main_exception_handler(self)
+
     def cmd(self, command, checks=None, expect_failure=False):
         command = self._apply_kwargs(command)
         return execute(self.cli_ctx, command, expect_failure=expect_failure).assert_with_checks(checks)
diff --git a/src/azure-cli/azure/cli/command_modules/profile/tests/latest/test_auth_e2e.py b/src/azure-cli/azure/cli/command_modules/profile/tests/latest/test_auth_e2e.py
new file mode 100644
index 00000000000..22339c36910
--- /dev/null
+++ b/src/azure-cli/azure/cli/command_modules/profile/tests/latest/test_auth_e2e.py
@@ -0,0 +1,62 @@
+# --------------------------------------------------------------------------------------------
+# Copyright (c) Microsoft Corporation. All rights reserved.
+# Licensed under the MIT License. See License.txt in the project root for license information.
+# --------------------------------------------------------------------------------------------
+
+from time import sleep
+
+import jwt
+from azure.cli.core.azclierror import AuthenticationError
+from azure.cli.testsdk import LiveScenarioTest
+from msrestazure.azure_exceptions import CloudError
+
+ARM_URL = "https://eastus2euap.management.azure.com/"  # ARM canary
+ARM_RETRY_INTERVAL = 10
+
+
+class CAEScenarioTest(LiveScenarioTest):
+
+    def test_client_capabilities(self):
+        self.cmd('login')
+
+        # Verify the access token has CAE enabled
+        out = self.cmd('account get-access-token').get_output_in_json()
+        access_token = out['accessToken']
+        decoded = jwt.decode(access_token, verify=False, algorithms=['RS256'])
+        self.assertEqual(decoded['xms_cc'], ['CP1'])  # xms_cc: extension microsoft client capabilities
+        self.assertEqual(decoded['xms_ssm'], '1')  # xms_ssm: extension microsoft smart session management
+
+    def _test_revoke_session(self, command, expected_error, checks=None):
+        self.test_client_capabilities()
+
+        # Test access token is working
+        self.cmd(command)
+
+        self._revoke_sign_in_sessions()
+
+        # CAE is currently only available in canary endpoint
+        # with mock.patch.object(self.cli_ctx.cloud.endpoints, "resource_manager", ARM_URL):
+        exit_code = 0
+        with self.assertRaises(expected_error) as ex:
+            while exit_code == 0:
+                exit_code = self.cmd(command).exit_code
+                sleep(ARM_RETRY_INTERVAL)
+        if checks:
+            checks(ex.exception)
+
+    def test_revoke_session_track2(self):
+        def check_aad_error_code(ex):
+            self.assertIn('AADSTS50173', str(ex))
+
+        self._test_revoke_session("storage account list", AuthenticationError, check_aad_error_code)
+
+    def test_revoke_session_track1(self):
+        def check_arm_error(ex):
+            self.assertEqual(ex.status_code, 401)
+            self.assertIsNotNone(ex.response.headers["WWW-Authenticate"])
+
+        self._test_revoke_session('group list', CloudError, check_arm_error)
+
+    def _revoke_sign_in_sessions(self):
+        # Manually revoke sign in sessions
+        self.cmd('rest -m POST -u https://graph.microsoft.com/v1.0/me/revokeSignInSessions')
diff --git a/src/azure-cli/requirements.py3.Darwin.txt b/src/azure-cli/requirements.py3.Darwin.txt
index 6dfc3dffa5f..6e98bdfb1c0 100644
--- a/src/azure-cli/requirements.py3.Darwin.txt
+++ b/src/azure-cli/requirements.py3.Darwin.txt
@@ -14,7 +14,7 @@ azure-cosmos==3.2.0
 azure-datalake-store==0.0.49
 azure-functions-devops-build==0.0.22
 azure-graphrbac==0.60.0
-azure-identity==1.5.0b2
+azure-identity==1.6.0b1
 azure-keyvault==1.1.0
 azure-keyvault-administration==4.0.0b3
 azure-keyvault==1.1.0
@@ -35,7 +35,7 @@ azure-mgmt-consumption==2.0.0
 azure-mgmt-containerinstance==1.5.0
 azure-mgmt-containerregistry==3.0.0rc17
 azure-mgmt-containerservice==11.1.0
-azure-mgmt-core==1.2.1
+azure-core==1.12.0b1
 azure-mgmt-cosmosdb==3.0.0
 azure-mgmt-databoxedge==0.2.0
 azure-mgmt-datalake-analytics==0.2.1
diff --git a/src/azure-cli/requirements.py3.Linux.txt b/src/azure-cli/requirements.py3.Linux.txt
index 3ee05b3e83f..4afd88aca1c 100644
--- a/src/azure-cli/requirements.py3.Linux.txt
+++ b/src/azure-cli/requirements.py3.Linux.txt
@@ -14,7 +14,7 @@ azure-cosmos==3.2.0
 azure-datalake-store==0.0.49
 azure-functions-devops-build==0.0.22
 azure-graphrbac==0.60.0
-azure-identity==1.5.0b2
+azure-identity==1.6.0b1
 azure-keyvault==1.1.0
 azure-keyvault-administration==4.0.0b3
 azure-keyvault==1.1.0
@@ -36,7 +36,7 @@ azure-mgmt-consumption==2.0.0
 azure-mgmt-containerinstance==1.5.0
 azure-mgmt-containerregistry==3.0.0rc17
 azure-mgmt-containerservice==11.1.0
-azure-mgmt-core==1.2.1
+azure-core==1.12.0b1
 azure-mgmt-cosmosdb==3.0.0
 azure-mgmt-databoxedge==0.2.0
 azure-mgmt-datalake-analytics==0.2.1
diff --git a/src/azure-cli/requirements.py3.windows.txt b/src/azure-cli/requirements.py3.windows.txt
index 14f8dbc41c3..dcbc49af177 100644
--- a/src/azure-cli/requirements.py3.windows.txt
+++ b/src/azure-cli/requirements.py3.windows.txt
@@ -14,7 +14,7 @@ azure-cosmos==3.2.0
 azure-datalake-store==0.0.49
 azure-functions-devops-build==0.0.22
 azure-graphrbac==0.60.0
-azure-identity==1.5.0b2
+azure-identity==1.6.0b1
 azure-keyvault==1.1.0
 azure-keyvault-administration==4.0.0b3
 azure-keyvault==1.1.0
@@ -36,7 +36,7 @@ azure-mgmt-consumption==2.0.0
 azure-mgmt-containerinstance==1.5.0
 azure-mgmt-containerregistry==3.0.0rc17
 azure-mgmt-containerservice==11.1.0
-azure-mgmt-core==1.2.1
+azure-core==1.12.0b1
 azure-mgmt-cosmosdb==3.0.0
 azure-mgmt-databoxedge==0.2.0
 azure-mgmt-datalake-analytics==0.2.1