The new protection capabilities include email encryption, ransomware detection and recovery and files restore features.
"Today, we're announcing new advanced protection capabilities coming to Office 365 Home and Office 365 Personal subscribers to help further protect individuals and families from online threats," Kirk Koenigsbauer, Corporate Vice President, Office 365 Client Applications-Microsoft, wrote in a blog post late on Thursday.
Ransomware has become an increasingly pervasive attack method in which cybercriminals 'lock up' and prevent access to files in an effort to extort money from victims.
"To help protect customers, we are introducing two new capabilities that allow you to recover your files if they are affected by a malicious attack," Koenigsbauer added.
The new email encryption feature in Outlook.com offers an added layer of protection and ensures end-to-end encryption of users' email.
"When you use Outlook.com email encryption, your email remains encrypted over a secure connection-minimising the threat of your information being intercepted or leaked to cybercriminals," the software giant added.
Explaining the files restore feature, Microsoft added: "Files Restore allows you to restore your entire OneDrive to a previous point in time within the last 30 days. You can use this feature to recover from an accidental mass delete, file corruption, ransomware or other catastrophic event."
The new Office 365 can also detect ransomware attacks and help users restore their OneDrive to a point before files were compromised, so they don't have to submit to cybercriminal demands.
"As these threats evolve, we are continuously improving detection capabilities to help keep you safe from the most advanced ransomware," the software giant added.