diff --git a/src/eap_server/eap_server_pwd.c b/src/eap_server/eap_server_pwd.c
index 943af0d15..66bd5d2e9 100644
--- a/src/eap_server/eap_server_pwd.c
+++ b/src/eap_server/eap_server_pwd.c
@@ -10,6 +10,7 @@
 
 #include "common.h"
 #include "crypto/sha256.h"
+#include "crypto/ms_funcs.h"
 #include "eap_server/eap_i.h"
 #include "eap_common/eap_pwd_common.h"
 
@@ -24,6 +25,7 @@ struct eap_pwd_data {
 	size_t id_server_len;
 	u8 *password;
 	size_t password_len;
+	int password_hash;
 	u32 token;
 	u16 group_num;
 	EAP_PWD_group *grp;
@@ -112,6 +114,7 @@ static void * eap_pwd_init(struct eap_sm *sm)
 	}
 	data->password_len = sm->user->password_len;
 	os_memcpy(data->password, sm->user->password, data->password_len);
+	data->password_hash = sm->user->password_hash;
 
 	data->bnctx = BN_CTX_new();
 	if (data->bnctx == NULL) {
@@ -181,7 +184,8 @@ static void eap_pwd_build_id_req(struct eap_sm *sm, struct eap_pwd_data *data,
 	wpabuf_put_u8(data->outbuf, EAP_PWD_DEFAULT_RAND_FUNC);
 	wpabuf_put_u8(data->outbuf, EAP_PWD_DEFAULT_PRF);
 	wpabuf_put_data(data->outbuf, &data->token, sizeof(data->token));
-	wpabuf_put_u8(data->outbuf, EAP_PWD_PREP_NONE);
+	wpabuf_put_u8(data->outbuf, data->password_hash ? EAP_PWD_PREP_MS :
+		      EAP_PWD_PREP_NONE);
 	wpabuf_put_data(data->outbuf, data->id_server, data->id_server_len);
 }
 
@@ -579,6 +583,10 @@ static void eap_pwd_process_id_resp(struct eap_sm *sm,
 				    const u8 *payload, size_t payload_len)
 {
 	struct eap_pwd_id *id;
+	const u8 *password;
+	size_t password_len;
+	u8 pwhashhash[16];
+	int res;
 
 	if (payload_len < sizeof(struct eap_pwd_id)) {
 		wpa_printf(MSG_INFO, "EAP-pwd: Invalid ID response");
@@ -610,11 +618,25 @@ static void eap_pwd_process_id_resp(struct eap_sm *sm,
 			   "group");
 		return;
 	}
-	if (compute_password_element(data->grp, data->group_num,
-				     data->password, data->password_len,
-				     data->id_server, data->id_server_len,
-				     data->id_peer, data->id_peer_len,
-				     (u8 *) &data->token)) {
+
+	if (data->password_hash) {
+		res = hash_nt_password_hash(data->password, pwhashhash);
+		if (res)
+			return;
+		password = pwhashhash;
+		password_len = sizeof(pwhashhash);
+	} else {
+		password = data->password;
+		password_len = data->password_len;
+	}
+
+	res = compute_password_element(data->grp, data->group_num,
+				       password, password_len,
+				       data->id_server, data->id_server_len,
+				       data->id_peer, data->id_peer_len,
+				       (u8 *) &data->token);
+	os_memset(pwhashhash, 0, sizeof(pwhashhash));
+	if (res) {
 		wpa_printf(MSG_INFO, "EAP-PWD (server): unable to compute "
 			   "PWE");
 		return;