A fully managed platform in Microsoft Foundry for hosting, scaling, and securing AI agents built with any supported framework or model
Hello Akku Reba,
Greetings!
Thanks for raising this question in Q&A forum.
No worries at all this is a very common issue for people getting started with Microsoft Foundry, and it has nothing to do with your technical background! The "Failed to create knowledge source" error usually happens because a few important setup steps need to be done before connecting your Azure Storage to your Foundry Agent. Think of it like trying to open a locked door you need the right key (permissions) and the door needs to be reachable (network settings). Let me walk you through it step by step in simple language.
Step 1: Give your Foundry Agent permission to read your storage
Your Azure Storage account is like a locked cabinet. By default, your Foundry Agent does not have the key to open it. You need to give it permission.
- Go to the Azure Portal (portal.azure.com) and open your Storage Account.
- On the left side menu, click Access Control (IAM).
- Click the + Add button and then click Add role assignment.
- In the search box, type Storage Blob Data Reader and select it, then click Next.
- Under "Assign access to", choose Managed identity.
- Click + Select members, search for your Foundry project name, select it and click Save.
This gives your Foundry Agent the key it needs to read your files.
Step 2: Make sure your storage account is not blocked by network settings
Sometimes storage accounts are set to "private" and only allow certain connections. Let's temporarily open it up to test.
- In your Storage Account, click Networking from the left menu.
- Under "Public network access", select Enabled from all networks.
- Click Save.
- Now go back to Microsoft Foundry and try connecting your storage again.
If this works, your agent can now reach the storage. For long-term use, you or your IT team can set up a more secure connection later.
Step 3: Make sure your storage is registered as a connection in Foundry first
This is a step many people miss! You cannot connect storage directly to the agent — you must first add it as a "connection" inside your Foundry project.
- Open your Foundry Project.
- Go to Settings or Connections (usually found on the left-side menu or under project settings).
- Click New connection and choose Azure Blob Storage.
- Enter your storage account name and container details, and save it.
- Only after this connection is saved, go back to your Agent and try creating the knowledge source using this connection.
Step 4: Double-check your file details
Before retrying, also confirm:
- Your file is inside a container in the storage account (not just the storage account itself).
- The file format is supported — use .pdf, .txt, .docx, or .md files only.
- The container name and storage account name are spelled correctly.
Step 5: Delete the failed knowledge source and try fresh
After completing all the above steps:
- In Foundry, go to your Agent's knowledge sources and delete the failed entry.
- Click Create new knowledge source again and start fresh.
- This is important because failed entries are not automatically retried — a fresh attempt is always needed after fixing permissions.
Quick Summary in plain words: You need to (1) give Foundry permission to read your storage, (2) make sure the storage is not blocked by network settings, (3) register the storage as a "connection" in Foundry first, and then (4) create the knowledge source. Following these steps in order should get you working!
If this answer helps you kindly accept the answer which will help others who have similar questions.
Best Regards,
Jerald Felix.