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Windows Server 2016 Datacenter In-Place Upgrade to Windows Server 2025 Datacenter – Compatibility and Licensing Clarification

Sridhar Raja 20 Reputation points
2026-03-10T10:11:41.6666667+00:00

Question:

Hello Microsoft Community,

I am currently evaluating upgrade options for a customer environment and would like clarification regarding Windows Server in-place upgrade compatibility and licensing.

Environment Details

Customer environment consists of multiple servers, but this question refers specifically to one server with the following configuration:

Hypervisor: VMware ESXi (VM)

Guest OS: Windows Server 2016 Datacenter (64-bit, Desktop Experience)

Licensing: Volume MAK license (activated)

Role: Domain Controller with DNS

Current status: OS is activated and running in production

Objective

We are exploring options to modernize the infrastructure and evaluate whether an in-place upgrade to Windows Server 2025 Datacenter is supported.

Questions

1. Direct Upgrade Path Is it supported to perform an in-place upgrade directly from Windows Server 2016 Datacenter to Windows Server 2025 Datacenter?

If this is not supported, what are the officially supported in-place upgrade paths?

For example:

Windows Server 2016 → Windows Server 2019

Windows Server 2016 → Windows Server 2022

Windows Server 2016 → Windows Server 2025

Which of these paths are officially supported by Microsoft?

2. Upgrade Prerequisites What are the required criteria for performing a successful in-place upgrade in this scenario?

For example:

Edition requirements (Datacenter → Datacenter)

Licensing channel compatibility (Volume / Retail / Evaluation)

Language compatibility

Domain Controller upgrade considerations

Virtual machine environment compatibility (VMware)

3. Known Working Upgrade Scenario In practical terms, which Windows Server version is currently known to work reliably for in-place upgrade from Windows Server 2016 Datacenter running on a VM?

Example possibilities:

2016 → 2019

2016 → 2022

4. Software Assurance (SA) Upgrade Rights If the customer has active Software Assurance (SA) associated with the Windows Server Datacenter license:

Are they entitled to upgrade to the latest Windows Server version without purchasing a new license?

Does this apply to both in-place upgrades and new VM deployments?

5. Licensing and Activation After Upgrade After performing either:

an in-place OS upgrade, or

a side-by-side migration to a new VM running Windows Server 2025

how should the OS be activated?

Options being considered:

Reusing the existing Volume MAK key

Activating with a new MAK/KMS key

Reassigning licenses under Software Assurance rights

Goal

The goal is to determine the best supported upgrade or migration approach from Windows Server 2016 Datacenter to Windows Server 2025 while remaining compliant with Microsoft licensing and upgrade policies.

Any guidance, documentation links, or real-world upgrade experiences would be greatly appreciated.

Thank you.Title:

Windows Server 2016 Datacenter In-Place Upgrade to Windows Server 2025 Datacenter – Compatibility and Licensing Clarification

Question:

Hello Microsoft Community,

I am currently evaluating upgrade options for a customer environment and would like clarification regarding Windows Server in-place upgrade compatibility and licensing.

Environment Details

Customer environment consists of multiple servers, but this question refers specifically to one server with the following configuration:

Hypervisor: VMware ESXi (VM)

Guest OS: Windows Server 2016 Datacenter (64-bit, Desktop Experience)

Licensing: Volume MAK license (activated)

Role: Domain Controller with DNS

Current status: OS is activated and running in production

Objective

We are exploring options to modernize the infrastructure and evaluate whether an in-place upgrade to Windows Server 2025 Datacenter is supported.

Questions

1. Direct Upgrade Path
Is it supported to perform an in-place upgrade directly from Windows Server 2016 Datacenter to Windows Server 2025 Datacenter?

If this is not supported, what are the officially supported in-place upgrade paths?

For example:

Windows Server 2016 → Windows Server 2019

Windows Server 2016 → Windows Server 2022

Windows Server 2016 → Windows Server 2025

Which of these paths are officially supported by Microsoft?

2. Upgrade Prerequisites
What are the required criteria for performing a successful in-place upgrade in this scenario?

For example:

Edition requirements (Datacenter → Datacenter)

Licensing channel compatibility (Volume / Retail / Evaluation)

Language compatibility

Domain Controller upgrade considerations

Virtual machine environment compatibility (VMware)

3. Known Working Upgrade Scenario
In practical terms, which Windows Server version is currently known to work reliably for in-place upgrade from Windows Server 2016 Datacenter running on a VM?

Example possibilities:

2016 → 2019

2016 → 2022

4. Software Assurance (SA) Upgrade Rights
If the customer has active Software Assurance (SA) associated with the Windows Server Datacenter license:

Are they entitled to upgrade to the latest Windows Server version without purchasing a new license?

Does this apply to both in-place upgrades and new VM deployments?

5. Licensing and Activation After Upgrade
After performing either:

an in-place OS upgrade, or

a side-by-side migration to a new VM running Windows Server 2025

how should the OS be activated?

Options being considered:

Reusing the existing Volume MAK key

Activating with a new MAK/KMS key

Reassigning licenses under Software Assurance rights

Goal

The goal is to determine the best supported upgrade or migration approach from Windows Server 2016 Datacenter to Windows Server 2025 while remaining compliant with Microsoft licensing and upgrade policies.

Any guidance, documentation links, or real-world upgrade experiences would be greatly appreciated.

Thank you.

Windows for business | Windows Server | Devices and deployment | Set up, install, or upgrade
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Answer accepted by question author
  1. VPHAN 25,000 Reputation points Independent Advisor
    2026-03-10T10:55:52.4933333+00:00

    Hi Sridhar Raja,

    To address your objective of modernizing your VMware ESXi environment, performing a direct in-place upgrade from Windows Server 2016 Datacenter to Windows Server 2025 Datacenter is officially supported by Microsoft. The upgrade engine now supports skipping up to four versions, allowing a direct transition while retaining your files and applications. However, because this specific virtual machine is actively functioning as a Domain Controller, choosing the in-place upgrade method introduces significant operational risks and functional limitations. The most critical limitation involves the Active Directory database file located at C:\Windows\NTDS\ntds.dit. Windows Server 2025 introduces a highly beneficial 32K database page size format to improve multi-value attribute scaling, but an in-place upgrade permanently locks the database into the legacy 8K page size compatibility mode. For this reason, a side-by-side migration is the superior and strongly recommended approach.

    Executing a side-by-side migration requires deploying a new virtual machine with a clean installation of Windows Server 2025 Datacenter. Before attempting to promote this new server to a Domain Controller, you must ensure that your Active Directory Forest and Domain Functional Levels are operating at the Windows Server 2016 level at a minimum, as earlier functional levels will block the promotion process. Once the new server is joined to the domain and the Active Directory Domain Services role is installed, you will promote it and carefully transfer the Flexible Single Master Operations roles using the Move-ADDirectoryServerOperationMasterRole PowerShell cmdlet. Afterward, you can safely demote the legacy Windows Server 2016 virtual machine, ensuring you do not encounter sensitive multi-master replication errors or Active Directory schema corruption.

    Regarding your Software Assurance and licensing queries, your active Software Assurance provides you with New Version Rights. This entitlement allows you to deploy Windows Server 2025 Datacenter without purchasing a new base license, covering both in-place upgrades and new virtual machine deployments. However, your existing Windows Server 2016 Multiple Activation Key cannot be reused to activate the new operating system. You must log into the Microsoft 365 Admin Center or the Volume Licensing Service Center to provision a dedicated Windows Server 2025 Multiple Activation Key. Once you have retrieved the correct key, you can apply it by opening an elevated command prompt and executing the slmgr.vbs /ipk command followed by your new key, and then executing slmgr.vbs /ato to force validation against the Microsoft licensing servers.

    Hope this answer brought you some useful information. If it did, please hit "accept answer". Should you have any questions, feel free to leave a comment.

    VP

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  1. Q&A Assist
    2026-03-10T10:12:19.76+00:00
    AI generated content. This question contains an answer created with AI from Q&A Assist. Learn more
    1. Direct upgrade path

    For nonclustered systems, Windows Server 2016 can be upgraded in-place by up to two versions at a time when targeting Windows Server 2022 or earlier, and up to four versions when targeting Windows Server 2025.

    From the supported upgrade matrix:

    • Windows Server 2016 → Windows Server 2019: Supported
    • Windows Server 2016 → Windows Server 2022: Supported
    • Windows Server 2016 → Windows Server 2025: Supported

    This applies to in-place upgrades on nonclustered systems. The edition is retained by default (Datacenter → Datacenter). Changing from Standard to Datacenter (or Datacenter to Datacenter: Azure Edition) is possible during upgrade, but not from Datacenter down to Standard.

    Relevant constraints for any in-place upgrade:

    • No upgrade from 32-bit to 64-bit (all current versions are 64-bit only).
    • No upgrade from one language to another.
    • No upgrade from Server Core to Desktop Experience or vice versa.
    • No upgrade from a previous Windows Server to an evaluation copy.
    • No upgrade from prerelease (preview) builds.
    1. Upgrade prerequisites for this scenario

    Key criteria from the documented upgrade and conversion guidance:

    • Edition path
      • Default: Datacenter (2016) → Datacenter (target version) is supported.
      • Cross-edition changes during upgrade are limited to:
        • Standard → Datacenter or Datacenter: Azure Edition
        • Datacenter → Datacenter: Azure Edition
      • Datacenter → Standard is not supported during upgrade.
    • Licensing state
      • The guidance for “upgrade of licensed versions” applies when Windows Server is already licensed (not evaluation). This matches a volume-licensed, activated 2016 Datacenter VM.
      • Upgrades to an evaluation edition are not supported.
    • Language compatibility
      • Upgrades from one language to another are not supported. Source and target media must be the same language.
    • Domain controller considerations
      • There is a specific restriction only for converting an evaluation domain controller to retail: that is not supported and requires migration to a retail-based DC.
      • For a DC that is already licensed (non-evaluation), the general upgrade rules apply; domain controller upgrade guidance is covered under “Upgrade Domain Controllers to Windows Server”.
    • Installation type
      • No in-place upgrade between Server Core and Server with Desktop Experience. The source is Desktop Experience, so the target must also be Desktop Experience.
    • Virtualization / VMware
      • In-place upgrades are supported for nonclustered systems; the documentation notes that in-place upgrades may also be supported by public or private cloud providers, but details must be confirmed with the provider.
      • For non-Azure VMs (such as VMware), the standard in-place upgrade process using ISO/installation media applies.
    • Other technical prerequisites
      • NIC Teaming should be disabled before upgrade and re-enabled afterward if used.
      • Systems configured to Boot from VHD cannot be upgraded in-place.
      • Some roles/features do not support in-place upgrade; role-specific guidance is in the roles and features upgrade/migration article.
      • A full backup (or VM snapshot) is strongly recommended before any in-place upgrade.
    1. Known working in-place upgrade scenarios from 2016 Datacenter VM

    From the official upgrade path table for nonclustered systems:

    • Windows Server 2016 → Windows Server 2019: supported in-place upgrade path.
    • Windows Server 2016 → Windows Server 2022: supported in-place upgrade path.
    • Windows Server 2016 → Windows Server 2025: supported in-place upgrade path.

    The documentation explicitly states that with Windows Server 2022 and earlier, nonclustered systems can upgrade up to two versions at a time, and with Windows Server 2025, nonclustered systems can upgrade up to four versions at a time, with 2016 listed as a supported source to 2025.

    1. Software Assurance (SA) upgrade rights

    The provided context does not contain licensing-rights details for Software Assurance (including entitlement to newer versions, or whether SA covers both in-place upgrades and new VM deployments). Licensing and SA rights are treated as legal/licensing topics and are not covered in the technical upgrade documentation.

    1. Licensing and activation after upgrade

    The context does not provide details on:

    • Whether an existing Volume MAK key can be reused after upgrading to a newer Windows Server version.
    • Whether a new MAK/KMS key is required per version.
    • How SA-based license reassignment should be handled.

    Those aspects fall under product licensing and activation policy and are not covered in the referenced technical articles.

    What can be stated from the context is:

    • In-place upgrade and license conversion are distinct operations.
    • Converting from evaluation to retail uses DISM with a product key, and domain controllers cannot be converted from evaluation to retail; instead, a new retail-based DC must be deployed and roles migrated.
    • For already-licensed servers, the “upgrade of licensed versions” guidance applies, but it does not specify key reuse or SA activation behavior.

    Recommended technical approach (from the available documentation)

    • Confirm that the VM is nonclustered, not booting from VHD, and that language, edition, and installation type (Desktop Experience) match between source and target media.
    • Ensure full system backup or VM snapshot.
    • For a domain controller, follow the domain controller upgrade guidance referenced in the upgrade options article.
    • Choose one of the supported in-place paths:
      • 2016 → 2019
      • 2016 → 2022
      • 2016 → 2025
    • Alternatively, consider migration to a new VM (clean install + role migration) if minimizing risk is more important than preserving the existing OS instance.

    Licensing, SA rights, and activation specifics are not covered in the provided technical context and should be validated through official licensing channels.

    References:

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