diff --git a/litellm/proxy/management_endpoints/ui_sso.py b/litellm/proxy/management_endpoints/ui_sso.py
index 94ef0d9b9e0..5c793068002 100644
--- a/litellm/proxy/management_endpoints/ui_sso.py
+++ b/litellm/proxy/management_endpoints/ui_sso.py
@@ -28,6 +28,7 @@ from litellm.proxy._types import (
     LiteLLM_UserTable,
     LitellmUserRoles,
     Member,
+    NewTeamRequest,
     NewUserRequest,
     NewUserResponse,
     ProxyErrorTypes,
@@ -53,7 +54,7 @@ from litellm.proxy.management_endpoints.sso_helper_utils import (
     check_is_admin_only_access,
     has_admin_ui_access,
 )
-from litellm.proxy.management_endpoints.team_endpoints import team_member_add
+from litellm.proxy.management_endpoints.team_endpoints import new_team, team_member_add
 from litellm.proxy.management_endpoints.types import CustomOpenID
 from litellm.proxy.utils import PrismaClient
 from litellm.secret_managers.main import str_to_bool
@@ -1011,6 +1012,27 @@ class MicrosoftSSOHandler:
                 llm_provider=httpxSpecialProvider.SSO_HANDLER
             )
 
+            # Handle MSFT Enterprise Application Groups
+            service_principal_id = os.getenv("MICROSOFT_SERVICE_PRINCIPAL_ID", None)
+            service_principal_group_ids: Optional[List[str]] = []
+            service_principal_teams: Optional[List[MicrosoftServicePrincipalTeam]] = []
+            if service_principal_id:
+                service_principal_group_ids, service_principal_teams = (
+                    await MicrosoftSSOHandler.get_group_ids_from_service_principal(
+                        service_principal_id=service_principal_id,
+                        async_client=async_client,
+                        access_token=access_token,
+                    )
+                )
+                verbose_proxy_logger.debug(
+                    f"Service principal group IDs: {service_principal_group_ids}"
+                )
+                if len(service_principal_group_ids) > 0:
+                    await MicrosoftSSOHandler.create_litellm_teams_from_service_principal_team_ids(
+                        service_principal_teams=service_principal_teams,
+                    )
+
+            # Fetch user membership from Microsoft Graph API
             all_group_ids = []
             next_link: Optional[str] = (
                 MicrosoftSSOHandler.graph_api_user_groups_endpoint
@@ -1036,6 +1058,14 @@ class MicrosoftSSOHandler:
                     f"Reached maximum page limit of {MicrosoftSSOHandler.MAX_GRAPH_API_PAGES}. Some groups may not be included."
                 )
 
+            # If service_principal_group_ids is not empty, only return group_ids that are in both all_group_ids and service_principal_group_ids
+            if len(service_principal_group_ids) > 0:
+                all_group_ids = [
+                    group_id
+                    for group_id in all_group_ids
+                    if group_id in service_principal_group_ids
+                ]
+
             return all_group_ids
 
         except Exception as e:
@@ -1092,6 +1122,107 @@ class MicrosoftSSOHandler:
             value=directory_objects,
         )
 
+    @staticmethod
+    async def get_group_ids_from_service_principal(
+        service_principal_id: str,
+        async_client: AsyncHTTPHandler,
+        access_token: Optional[str] = None,
+    ) -> Tuple[List[str], List[MicrosoftServicePrincipalTeam]]:
+        """
+        Gets the groups belonging to the Service Principal Application
+
+        Service Principal Id is an `Enterprise Application` in Azure AD
+
+        Users use Enterprise Applications to manage Groups and Users on Microsoft Entra ID
+        """
+        base_url = "https://graph.microsoft.com/v1.0"
+        # Endpoint to get app role assignments for the given service principal
+        endpoint = f"/servicePrincipals/{service_principal_id}/appRoleAssignedTo"
+        url = base_url + endpoint
+
+        headers = {
+            "Authorization": f"Bearer {access_token}",
+            "Content-Type": "application/json",
+        }
+
+        response = await async_client.get(url, headers=headers)
+        response_json = response.json()
+        verbose_proxy_logger.debug(
+            f"Response from service principal app role assigned to: {response_json}"
+        )
+        group_ids: List[str] = []
+        service_principal_teams: List[MicrosoftServicePrincipalTeam] = []
+
+        for _object in response_json.get("value", []):
+            if _object.get("principalType") == "Group":
+                # Append the group ID to the list
+                group_ids.append(_object.get("principalId"))
+                # Append the service principal team to the list
+                service_principal_teams.append(
+                    MicrosoftServicePrincipalTeam(
+                        principalDisplayName=_object.get("principalDisplayName"),
+                        principalId=_object.get("principalId"),
+                    )
+                )
+
+        return group_ids, service_principal_teams
+
+    @staticmethod
+    async def create_litellm_teams_from_service_principal_team_ids(
+        service_principal_teams: List[MicrosoftServicePrincipalTeam],
+    ):
+        """
+        Creates Litellm Teams from the Service Principal Group IDs
+
+        When a user sets a `SERVICE_PRINCIPAL_ID` in the env, litellm will fetch groups under that service principal and create Litellm Teams from them
+        """
+        from litellm.proxy.proxy_server import prisma_client
+
+        if prisma_client is None:
+            raise ProxyException(
+                message="Prisma client not found. Set it in the proxy_server.py file",
+                type=ProxyErrorTypes.auth_error,
+                param="prisma_client",
+                code=status.HTTP_500_INTERNAL_SERVER_ERROR,
+            )
+        verbose_proxy_logger.debug(
+            f"Creating Litellm Teams from Service Principal Teams: {service_principal_teams}"
+        )
+        for service_principal_team in service_principal_teams:
+            litellm_team_id: Optional[str] = service_principal_team.get("principalId")
+            litellm_team_name: Optional[str] = service_principal_team.get(
+                "principalDisplayName"
+            )
+            if litellm_team_id:
+                try:
+                    verbose_proxy_logger.debug(
+                        f"Creating Litellm Team: {litellm_team_id} - {litellm_team_name}"
+                    )
+
+                    team_obj = await prisma_client.db.litellm_teamtable.find_first(
+                        where={"team_id": litellm_team_id}
+                    )
+                    verbose_proxy_logger.debug(f"Team object: {team_obj}")
+                    if team_obj:
+                        verbose_proxy_logger.debug(
+                            f"Team already exists: {litellm_team_id} - {litellm_team_name}"
+                        )
+                        continue
+                    await new_team(
+                        data=NewTeamRequest(
+                            team_id=litellm_team_id,
+                            team_alias=litellm_team_name,
+                        ),
+                        # params used for Audit Logging
+                        http_request=Request(scope={"type": "http", "method": "POST"}),
+                        user_api_key_dict=UserAPIKeyAuth(
+                            token="",
+                            key_alias=f"litellm.{MicrosoftSSOHandler.__name__}",
+                        ),
+                    )
+                except Exception as e:
+                    verbose_proxy_logger.exception(f"Error creating Litellm Team: {e}")
+
 
 class GoogleSSOHandler:
     """