Outlook 2016 has a new, and extremely frustrating default autodiscover behavior that searches for, and connects to a Microsoft account with the same email address instead of an on-premise Exchange. For example if you have a local Exchange server and your email address is john@domain.com, and you also have an account in O365 (Office 365) with the same email address (regardless of whether its in use or not), Outlook 2016's default behavior is to connect to the Microsoft account mailbox, regardless of your autodiscover settings. We have found a workaround for this extremely frustrating behavior. Please see below:
1. Open Outlook and create a profile.
2. Check the box to create account manually.
3. Select "Exchange" and if a mailbox matching the email address of the user is located in Office 365, Outlook will attempt to connect, ignoring any local autodiscover settings.
4. When the authentication window open click "cancel" and Outlook will notify you that "something went wrong"
5. Select manual settings and click Exchange once again.
6. When the authentication window prompts for username and password enter your domain user "domain\user" and password and check "remember password".
7. Outlook should now connect to your on-premise mailbox.
8. Once outlook opens you may get a notification asking for credentials again. Click cancel on this prompt and it should not reappear.