By default, when a new Domain
Controller with Windows Server 2008 / Windows Server
2008 R2 is being installed, the lowest
available functional level is Windows 2000. The Default
selected forest functional level is Windows Server 2003

When you create a new domain
or a new forest, set the domain and forest functional
levels to the highest values that you know your
environment can support. This way, you can take
advantage of as many AD DS features as possible.
If you are sure that no domain
controllers that run Windows Server 2008 (or any earlier
operating system) will ever be added to the domain or
forest, select the Windows Server 2008 R2 functional
level
To raise the functional level of the
Forest and functional level of the Domain , follow the
below Steps:
-
Open Active Directory Domains
and Trusts
Click Start >
Administrative Tools > Active
Directory Domains and Trusts

The Active Directory Domains and Trusts Management
Console will display the available Domains

-
Right click on the
Active Directory Domains and Trusts [
ComputerName.DomainName.com ] main node ,
and click on Raise Forest Functional
Level...

-
The current forest functional
level will be displayed along with the available
functional levels that you can use for your forest
level .

Select the forest functional level and click on
Raise

On the warning dialog box, confirm your choice by
clicking on OK

Note the following : After you set the forest
functional level to a certain value, you cannot roll
back or lower the forest functional level,
with one exception:
when you raise the forest functional level to
Windows Server 2008 R2 and if
Active Directory Recycle Bin is not enabled,
you have the option of rolling the forest functional
level back to Windows Server 2008. You can lower the
forest functional level only from Windows Server
2008 R2 to Windows Server 2008, it cannot be rolled
back to Windows Server 2003.

The functional level raise will be successful, and
the replication process will start between the
Domain Controllers in the forest.
-
Open Active Directory Domains
and Trusts
-
Right click on the Domain name,
in this example : elmajdal.com , and then click on
Raise
Domain Functional Level...

-
You will notice that you don't
need to do anything here, as you already have raised
the Forest Functional Level to the highest available
level which is Windows Server 2008 R2.
You cannot set the domain
functional level to a value that is
lower than the forest functional level.
For example, if you set the forest
functional level to Windows Server 2008
R2, you can set the domain functional
level only to Windows Server 2008 R2.
The Windows 2000, Windows Server 2003,
and Windows Server 2008 domain
functional level values will not be
available on the Set domain functional
level wizard page. In addition, all
domains that you subsequently add to
that forest will have the Windows Server
2008 R2 domain functional level by
default.

Note the following : You can lower the domain
functional level only from Windows Server 2008 R2 to
Windows Server 2008. If the domain functional level
is set to Windows Server 2008 R2, it cannot be
rolled back, for example, to Windows Server 2003.
Summary
When you create a new
domain or a new forest, set the domain and forest
functional levels to the highest values that you know
your environment can support. This way, you can take
advantage of as many AD DS features as possible
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