diff --git a/apps/web/app/(app)/accounts/AddAccount.tsx b/apps/web/app/(app)/accounts/AddAccount.tsx
index c1ffa0aa4a..0e0fa9d008 100644
--- a/apps/web/app/(app)/accounts/AddAccount.tsx
+++ b/apps/web/app/(app)/accounts/AddAccount.tsx
@@ -15,7 +15,6 @@ import { Dialog } from "@/components/ui/dialog";
 import type { GetAuthLinkUrlResponse } from "@/app/api/google/linking/auth-url/route";
 import type { GetOutlookAuthLinkUrlResponse } from "@/app/api/outlook/linking/auth-url/route";
 import { SCOPES as GMAIL_SCOPES } from "@/utils/gmail/scopes";
-import { SCOPES as OUTLOOK_SCOPES } from "@/utils/outlook/scopes";
 
 export function AddAccount() {
   const handleConnectGoogle = async () => {
@@ -37,25 +36,31 @@ export function AddAccount() {
     window.location.href = data.url;
   };
 
-  const handleConnectMicrosoft = async () => {
-    await signIn.social({
-      provider: "microsoft",
-      callbackURL: "/accounts",
-      scopes: [...OUTLOOK_SCOPES],
-    });
-  };
+  const handleConnectMicrosoft = async (action: "merge" | "create") => {
+    const response = await fetch(
+      `/api/outlook/linking/auth-url?action=${action}`,
+      {
+        method: "GET",
+        headers: { "Content-Type": "application/json" },
+      },
+    );
 
-  const handleMergeMicrosoft = async () => {
-    const response = await fetch("/api/outlook/linking/auth-url", {
-      method: "GET",
-      headers: { "Content-Type": "application/json" },
-    });
+    if (!response.ok) {
+      toastError({
+        title: "Error initiating Microsoft link",
+        description: "Please try again or contact support",
+      });
+      return;
+    }
 
     const data: GetOutlookAuthLinkUrlResponse = await response.json();
 
     window.location.href = data.url;
   };
 
+  const handleCreateMicrosoft = () => handleConnectMicrosoft("create");
+  const handleMergeMicrosoft = () => handleConnectMicrosoft("merge");
+
   return (
     <Card className="flex items-center justify-center">
       <CardContent className="flex flex-col items-center gap-4 p-6">
@@ -68,7 +73,7 @@ export function AddAccount() {
         <AddEmailAccount
           name="Microsoft"
           image="/images/microsoft.svg"
-          handleConnect={handleConnectMicrosoft}
+          handleConnect={handleCreateMicrosoft}
           handleMerge={handleMergeMicrosoft}
         />
       </CardContent>
diff --git a/apps/web/app/api/outlook/linking/auth-url/route.ts b/apps/web/app/api/outlook/linking/auth-url/route.ts
index 0b75588385..4a32086e89 100644
--- a/apps/web/app/api/outlook/linking/auth-url/route.ts
+++ b/apps/web/app/api/outlook/linking/auth-url/route.ts
@@ -6,8 +6,8 @@ import { OUTLOOK_LINKING_STATE_COOKIE_NAME } from "@/utils/outlook/constants";
 
 export type GetOutlookAuthLinkUrlResponse = { url: string };
 
-const getAuthUrl = ({ userId }: { userId: string }) => {
-  const stateObject = { userId, nonce: crypto.randomUUID() };
+const getAuthUrl = ({ userId, action }: { userId: string; action: string }) => {
+  const stateObject = { userId, action, nonce: crypto.randomUUID() };
   const state = Buffer.from(JSON.stringify(stateObject)).toString("base64url");
 
   const baseUrl = getLinkingOAuth2Url();
@@ -18,9 +18,11 @@ const getAuthUrl = ({ userId }: { userId: string }) => {
 
 export const GET = withAuth(async (request) => {
   const userId = request.auth.userId;
-  const { url, state } = getAuthUrl({ userId });
+  const url = new URL(request.url);
+  const action = url.searchParams.get("action") || "merge";
+  const { url: authUrl, state } = getAuthUrl({ userId, action });
 
-  const response = NextResponse.json({ url });
+  const response = NextResponse.json({ url: authUrl });
 
   response.cookies.set(OUTLOOK_LINKING_STATE_COOKIE_NAME, state, {
     httpOnly: true,
diff --git a/apps/web/app/api/outlook/linking/callback/route.ts b/apps/web/app/api/outlook/linking/callback/route.ts
index dc3fe5dc06..9352af7144 100644
--- a/apps/web/app/api/outlook/linking/callback/route.ts
+++ b/apps/web/app/api/outlook/linking/callback/route.ts
@@ -32,7 +32,7 @@ export const GET = withError(async (request: NextRequest) => {
     return NextResponse.redirect(redirectUrl, { headers: response.headers });
   }
 
-  let decodedState: { userId: string; nonce: string };
+  let decodedState: { userId: string; action: string; nonce: string };
   try {
     decodedState = JSON.parse(
       Buffer.from(storedState, "base64url").toString("utf8"),
@@ -46,7 +46,7 @@ export const GET = withError(async (request: NextRequest) => {
 
   response.cookies.delete(OUTLOOK_LINKING_STATE_COOKIE_NAME);
 
-  const { userId: targetUserId } = decodedState;
+  const { userId: targetUserId, action } = decodedState;
 
   if (!code) {
     logger.warn("Missing code in Outlook linking callback");
@@ -114,12 +114,93 @@ export const GET = withError(async (request: NextRequest) => {
     });
 
     if (!existingAccount) {
-      logger.warn(
-        "Merge Failed: Microsoft account not found in the system. Cannot merge.",
-        { email: providerEmail },
-      );
-      redirectUrl.searchParams.set("error", "account_not_found_for_merge");
-      return NextResponse.redirect(redirectUrl, { headers: response.headers });
+      if (action === "merge") {
+        logger.warn(
+          "Merge Failed: Microsoft account not found in the system. Cannot merge.",
+          { email: providerEmail },
+        );
+        redirectUrl.searchParams.set("error", "account_not_found_for_merge");
+        return NextResponse.redirect(redirectUrl, {
+          headers: response.headers,
+        });
+      } else {
+        logger.info(
+          "Creating new Microsoft account and linking to current user",
+          {
+            email: providerEmail,
+            targetUserId,
+          },
+        );
+
+        let expiresAt: Date | null = null;
+        if (tokens.expires_at) {
+          expiresAt = new Date(tokens.expires_at * 1000);
+        } else if (tokens.expires_in) {
+          const expiresInSeconds =
+            typeof tokens.expires_in === "string"
+              ? Number.parseInt(tokens.expires_in, 10)
+              : tokens.expires_in;
+          expiresAt = new Date(Date.now() + expiresInSeconds * 1000);
+        }
+
+        const newAccount = await prisma.account.create({
+          data: {
+            userId: targetUserId,
+            type: "oidc",
+            provider: "microsoft",
+            providerAccountId: profile.id || providerEmail,
+            access_token: tokens.access_token,
+            refresh_token: tokens.refresh_token,
+            expires_at: expiresAt,
+            scope: tokens.scope,
+            token_type: tokens.token_type,
+          },
+        });
+
+        let profileImage = null;
+        try {
+          const photoResponse = await fetch(
+            "https://graph.microsoft.com/v1.0/me/photo/$value",
+            {
+              headers: {
+                Authorization: `Bearer ${tokens.access_token}`,
+              },
+            },
+          );
+
+          if (photoResponse.ok) {
+            const photoBuffer = await photoResponse.arrayBuffer();
+            const photoBase64 = Buffer.from(photoBuffer).toString("base64");
+            profileImage = `data:image/jpeg;base64,${photoBase64}`;
+          }
+        } catch (error) {
+          logger.warn("Failed to fetch profile picture", { error });
+        }
+
+        await prisma.emailAccount.create({
+          data: {
+            email: providerEmail,
+            userId: targetUserId,
+            accountId: newAccount.id,
+            name:
+              profile.displayName ||
+              profile.givenName ||
+              profile.surname ||
+              providerEmail,
+            image: profileImage,
+          },
+        });
+
+        logger.info("Successfully created and linked new Microsoft account", {
+          email: providerEmail,
+          targetUserId,
+          accountId: newAccount.id,
+        });
+        redirectUrl.searchParams.set("success", "account_created_and_linked");
+        return NextResponse.redirect(redirectUrl, {
+          headers: response.headers,
+        });
+      }
     }
 
     if (existingAccount.userId === targetUserId) {