In Short.
To compare two Word documents in Microsoft Word, go to the 'Review' tab, click the 'Compare' drop-down button, and select 'Compare'. Choose the original and revised documents, label changes if desired, specify comparison settings, and click 'OK'. A new window will show all changes made, which can be reviewed and accepted/rejected individually or as a whole. Remember to save the compared document separately.

Sometimes, you may need to compare two Word documents in order to view their differences. Maybe you and your collaborator working on the same document but separately or you might have edited your document without turning on the Track Changes mode or you may be a lawyer and you want to note the revisions made between two copies of a contract.

Whatever the reason, when you have two or more versions of the same document, you don’t have to manually compare them by relating the original document with the revised document word by word. You can just use Microsoft Word’s ‘Compare’ feature to compare two Word documents to see how they differ.

When you compare two documents in Word, a new third document will appear showing the comparisons between the two documents, which you can save as a separate document. This is helpful when you don’t want any changes between the original and revised document and you want to keep both copies of the document for future uses.

It also shows what changes were made and who made them. This feature is particularly useful for legal professionals for creating legal blackline documents. Here’s how you compare two documents in Microsoft Word.

Comparing Two Versions of a Microsoft Word Document

First, open one of the two documents that you want to compare (Or it can be any document file, even a blank document). Then, go to the ‘Review’ tab in the Ribbon.

Then, click the ‘Compare’ drop-down button in the toolbar and select the ‘Compare’ option.

This will open the ‘Compare Documents’ dialog box open on your screen. The Compare Documents window has two sections: Original Document and Revised Document. You’ll need to choose the original and revised documents you wish to compare here.

Click the drop-down list under ‘Original Document’ and select the original document you wish to compare with the revised document (NEET (2020).docx in our example).

If you don’t see your document in the dropdown list, click the folder icon on the right to the Original Document drop-down.

In the ‘Open’ dialog box, navigate to that document, select it and click the ‘OK’ button.

Under the ‘Revised Document’, select the revised version of the document from the drop-down menu (in our case, NEET (2021)-Revised Document.docx).

In the ‘Label changes’ with the field, enter what you want to appear next to the changes in the document (It can be a name or a note). We’re going to label this ‘Stark’ since this is who made the edits to the original document.

You can also switch the documents by clicking the double-arrow icon to compare the documents the other way.

Click the ‘More >>’ button in the bottom left corner to see the advanced options. This is optional, you can also click ‘OK’ to see the comparison.

Under ‘Comparison settings’, specify the options you wish to use to compare your documents (by default all options are selected).

In the ‘Show changes’ section, you can choose whether you want to show changes for one character at a time or one word at a time. Also, you can choose where you want to show the changes, it can be the original document, the revised document, or a new document.  It is recommended to use ‘New document’.

Once you finished setting this up, Click ‘OK’ to compare the document.

This will open a new window with four panes. The ‘Compared Document’ in the middle shows and highlights all changes that were made with red marks on the left margin. On the right side of the screen, a double-pane displays the original and revised documents stacked. On the left, the ‘Revisions’ pane shows the list of any and all the revisions that were made, including what was removed, added, and changed.

Click on the red line on the left margin of the compared document to view details about each change.

After reviewing the tracked changes, when you want to accept a specific revision, you can right-click on the changed/added text and select ‘Accept Insertion’ or ‘Reject Insertion’ to keep or revert the change, respectively.

To accept all of the changes at once, click the ‘Accept’ button, under the Changes group in the ‘Review’ tab and select the ‘Accept All Changes’ option. You also choose other options in the drop-down menu depending on your preference.

To reject all of the changes at once, click the ‘Reject’ button right next to the Accept button in the ‘Review’ tab and select ‘Reject All Changes’.

Once you are finished, remember to save this compared document as a separate file using the ‘Save as’ option in the toolbar.