How to categorize Outlook emails with AI Builder and Power Automate

In Power Automate, go to AI hub and select Build your own prompt. This prompt will read each email and decide its category.

In the instructions, tell the AI what its job is and define the categories. The video's prompt:

• Says it is an email classification system that puts each business email into exactly one category
• Defines seven categories: Invoices (bills and payments), Orders (purchase orders and vendor matters), Legal (contracts and compliance), Admin (HR and IT notifications), Customer (external client emails), Projects (internal teamwork) and Other (everything else, like newsletters)
• Explains how to decide: read the subject first, then the body, then check the sender. For example, an invoice number points to Invoices, and a customer sender points to Customer.
• Gives short examples such as "Invoice payment due" = Invoices and "Project status update" = Projects
• Ends with: respond with only the category name, no explanation

Replace each placeholder in the instructions with an input. Delete the placeholder, select Add content > Text, and name the input. Create three text inputs: Subject, Body and Sender. Clear names make them easy to find in the flow.

Leave the model on the default GPT-4.1 mini. It handles text-only classification well. Under the model response settings, change the output to JSON so the flow receives a structured category value it can use directly.

Enter a sample subject and body (you can leave the sender blank) and select Test. Check the category it returns, then try a second sample, such as a customer inquiry, to confirm it picks Customer.

Name the prompt Microsoft Outlook Email Classifier and save it.

In Outlook on the web, right-click any email and choose Categorize > Manage categories. Edit the existing categories or create new ones so you have one for each category in your prompt, each with a color.

Use the exact same names as in the AI Builder instructions. If they do not match, Power Automate creates new grey categories instead of using yours. You can also do this in the Outlook desktop app.

In Power Automate, select Create > Automated cloud flow, name it Microsoft Outlook Email Classifier, and choose the trigger When a new email arrives (V3) from Office 365 Outlook.

Add Run a prompt (under AI capabilities, or search for it). Select your Microsoft Outlook Email Classifier prompt and fill the three inputs from the trigger:

• Subject: Subject
• Body: Body
• Sender: From

If you cannot see a field, select See more under the trigger's outputs.

Add Assign an Outlook category. Set Message Id to the trigger's Message Id (under See more) and Category to the category output from Run a prompt. Save the flow.

Select Test > Manually > Test and send yourself an email that looks like an invoice. When the run finishes, the email in Outlook shows the Invoices category. Send several different emails and check that each gets the right category.

Select a category name in Outlook to see all emails in it, or type the category name in the search box and select it.

To stop categorizing for a while, turn off the flow in Power Automate. Turn it back on when you are ready.