Whether you like SharePoint Designer or hate it, if you are working with Office 365 the SharePoint Designer can be a handy tool to quickly modify styles or display templates. So in a recent scenario I used SharePoint Designer to debug Display Templates and issues with date formatting. One of the things I found while debugging was that sometimes SharePoint Designer would not let me connect to my Office 365 tenant with a error stating: “The version of Microsoft SharePoint Foundation running on the server is more recent than the version of SharePoint Designer you are using. You need a more recent version of SharePoint Designer.” This is slightly confusing as there is only one version of SharePoint Designer as far as I know.
As it turns out that you will need to connect to your Office 365 tenant using Internet Explorer first, before you can connect to it using SharePoint Designer. If you login just make sure to check the ‘Keep me signed in’ box and you should no longer get an error when opening your site in SharePoint Designer.
This is actually the same it works for mapping a network drive to Office 365. As pointed out in a the thread How can I map SharePoint as a network drive and keep the connection alive you will need to check in the keep me signed in checkbox. I did also add the site as a trusted site to my Internet Explorer, yet that was not something that was required for connecting to Office 365 with SharePoint Designer.
Keep in mind that you will have to login with Internet Explorer to actually ‘fix’ this issue. Using any other browser works fine as long as you stay in the browser, however integration with Office Clients will be buggy: SharePoint Designer will not be able to connect and mapping network drives will fail as well.