How to Create a Redline Comparison in Word (Step by Step)

Word has a built-in feature that compares two documents and produces a redline showing every difference between them. It is called Compare Documents, it lives under the Review tab, and it has been part of Word for over twenty years. If you work with contracts, you have probably used it.

This post is a step-by-step walkthrough of how to create a redline comparison in Word. We will cover the mechanics (which buttons to click), the settings (what each option does and when to change it), how to read the output, and the common problems you will run into on real documents. We will also cover when Word Compare is enough and when you might need something more.

Step-by-step: creating a redline comparison in Word

This works in Word for Microsoft 365 (Windows and Mac), Word 2021, Word 2019, and earlier desktop versions. The menu locations are the same across versions. Word Online (the browser version) does not have the Compare feature.

1. Open Word and go to the Review tab

You do not need to have either document open first. Start from a blank document or any open document. Click the Review tab in the ribbon at the top of the screen.

2. Click Compare

In the Review tab, find the Compare button. It is in the Compare group, usually toward the right side of the ribbon. Click it and you will see two options:

• Compare -- compares two documents and shows the differences as tracked changes.
• Combine -- merges tracked changes from two versions of a document into one.

For creating a redline, choose Compare (the first option).

3. Select the original document

In the Compare Documents dialog box, click the folder icon next to Original document and browse to select the first version of the file. This is the baseline -- the version you consider "before."

If the documents are already open in Word, you can also select them from the dropdown list instead of browsing.

4. Select the revised document

Click the folder icon next to Revised document and browse to select the second version. This is the version you consider "after" -- the one with the changes you want to see.

The labels "Original" and "Revised" affect how the tracked changes are attributed in the output. Changes will be shown as edits made to go from the original to the revised version. Getting these backwards will not break anything, but the tracked changes will show insertions as deletions and vice versa, which is confusing.

5. Set the label for changes

Next to each document selector, there is a Label changes with field. By default, Word uses the file name. You can change this to something more descriptive like "Counterparty's Draft" or "Version 3 - March 15." This label appears in the tracked changes markup so you know which document the changes came from.

6. Review the comparison settings

Click the More button (if the settings are not already expanded) to see the full list of comparison options. These control what Word looks for when comparing. We cover each setting in detail in the next section. For a first pass, the defaults are reasonable.

7. Choose where to show changes

At the bottom of the dialog, under Show changes in, you have three options:

• Original document -- inserts the tracked changes into the original file.
• Revised document -- inserts the tracked changes into the revised file.
• New document -- creates a new document with the tracked changes (recommended).

Choose New document. This keeps both original files untouched and gives you a clean comparison document you can save, share, or discard without affecting the source files.

8. Click OK

Word processes the two documents and opens the comparison result. Depending on the length and complexity of the documents, this takes anywhere from a second to a minute or two. The result is a document with tracked changes showing every difference Word detected between the two versions.

Understanding the Compare settings

The Compare Documents dialog has a set of checkboxes that control what Word looks for. Understanding these settings helps you get cleaner output and avoid unnecessary noise.

Comparison options (the checkboxes)

Each checkbox tells Word to compare a specific aspect of the documents. Here is what each one does:

• Comments. Compares comments in the two documents. If a comment was added, deleted, or changed, it shows up in the comparison. Leave this on if comments are part of your review workflow.
• Case changes. Detects changes in capitalization. If "shall" became "Shall," Word flags it. This is usually worth keeping on for legal documents where capitalization can indicate defined terms.
• Whitespace. Detects changes in spaces and tabs. This catches things like double spaces becoming single spaces. For most legal reviews, this produces noise without value. Consider unchecking it.
• Tables. Compares table content. Leave this on if the document contains tables, but be aware that table comparison in Word is often unreliable (more on this below).
• Headers and footers. Compares content in headers and footers. If the header shows a document title, version number, or confidentiality notice, you want to catch changes to it. Leave this on.
• Footnotes and endnotes. Compares footnote and endnote content. Relevant for documents with footnoted definitions or regulatory references.
• Textboxes. Compares content inside text boxes. Some contracts use text boxes for callouts, side notes, or exhibits. If yours does, keep this on.
• Fields. Compares field codes (automatic date fields, cross-reference fields, page number fields). Field changes can indicate structural modifications to the document. Keep this on unless the noise from auto-updating fields is too much.
• Moves. When checked, Word attempts to detect text that was moved from one location to another and marks it as a move rather than a deletion and insertion. In practice, Word's move detection is limited -- it works best with entire paragraphs that were relocated without any text changes. It often misses moves or reports them inconsistently.
• Formatting. Detects changes to fonts, sizes, bold/italic, line spacing, indentation, and other formatting properties. This is the most consequential setting. With it on, template mismatches can flood the comparison with formatting noise. With it off, you might miss formatting changes that matter. There is no middle ground in Word -- it is all or nothing.

Show changes at

Below the checkboxes, you will see an option for showing changes at the Character level or Word level.

• Character level shows the exact characters that changed. If "30" became "10," it highlights the "3" and "1" individually.
• Word level shows the entire word as changed. If "30" became "10," it shows "30" deleted and "10" inserted as whole units.

For legal documents, Word level is usually more readable. Character-level comparison can produce fragmented markup that is hard to parse, especially when multiple words in a sentence changed.

Reading the comparison output

After Word generates the comparison, you will see the result displayed in a specific layout. Understanding this layout helps you navigate efficiently.

The three-pane view

By default, Word shows the comparison in a three-pane layout:

• Center pane (Compared Document). This is the main view. It shows the comparison result with tracked changes markup -- red strikethrough for deletions, red underlined text for insertions (colors may vary by your Word settings).
• Left pane (Revisions). A summary list of all changes. Each change is listed with its type (insertion, deletion, formatting change) and a snippet of the affected text. You can click any item in this list to jump to that change in the center pane.
• Right pane (Source Documents). Shows the original document on top and the revised document on the bottom. These scroll in sync with the center pane so you can see the source context for each change.

If the three-pane view is not showing, go to Review > Compare > Show Source Documents and select Show Both. You can also choose to show only the original, only the revised, or hide source documents entirely if you prefer a simpler view.

Navigating changes

Use the Previous and Next buttons in the Review tab (in the Changes group) to jump between changes sequentially. This is faster than scrolling, especially in long documents. Each click moves you to the next tracked change and highlights it.

You can also use the Revisions pane (the list on the left) to jump directly to a specific change. This is useful when you want to review a particular section without stepping through every change in order.

Accepting and rejecting changes

If you want to produce a clean version of the document from the comparison, you can accept or reject individual changes:

• Accept keeps the change (the revised version's text stays).
• Reject reverts the change (the original version's text stays).
• Accept All or Reject All applies to every change in the document at once.

Be careful with Accept All and Reject All. In a comparison context, accepting all changes gives you the revised document. Rejecting all changes gives you the original document. Neither gives you a selectively merged version. If you need to keep some changes and reject others, step through them individually.

Saving the comparison

The comparison document is a regular Word file with tracked changes. You can save it as a .docx file and share it with colleagues, send it to a client for review, or attach it to an email. The tracked changes markup is preserved in the saved file, so anyone who opens it will see the same comparison view.

Common problems with Word Compare

Word Compare is a solid tool for straightforward comparisons. But on real-world legal documents, you will run into recurring issues. Knowing about them in advance helps you decide when to trust the output and when to look more carefully.

Formatting noise

This is the most common complaint. When two documents were created with different templates, or when one party reformatted the document before returning it, Word Compare reports every formatting difference alongside the content changes. A 30-page agreement where the counterparty used a different default font might show 150 formatting changes mixed in with 10 actual text edits.

The only built-in solution is to uncheck "Formatting" in the Compare settings, but that hides all formatting changes, including ones that might matter (a changed heading level, a modified indentation that restructures a list). There is no way to filter by importance -- you either see all of it or none of it.

Character-level differences without context

Word sometimes shows changes at a granularity that is hard to interpret. A changed number in a sentence might be shown as individual character deletions and insertions rather than as a clear "this value changed from X to Y." When multiple small changes occur close together in a paragraph, the tracked changes markup can become fragmented to the point where reading the original and revised text side by side would be faster than trying to parse the markup.

Switching the comparison setting from "Character level" to "Word level" helps in many cases, but it does not fully solve the problem for sentences with dense edits.

The "everything changed" problem

Sometimes Word Compare marks an entire paragraph as deleted and re-inserted, even when only a few words changed. The diff algorithm determined that treating the whole paragraph as a replacement was "simpler" (in edit-distance terms) than showing granular word-level changes. The result is technically accurate but practically unhelpful: you see a block of struck-through text followed by a block of inserted text that looks nearly identical, and you have to read both carefully to find the actual differences.

This happens most often with long, dense paragraphs that had several small edits, or when surrounding text shifted enough to confuse the alignment algorithm.

Table comparison issues

Word Compare handles tables poorly. When rows are added or removed, Word can misalign the remaining rows, comparing row 3 of the original against row 5 of the revised version. The output suggests that half the table changed when really only one row was inserted. Merged cells and complex table structures make this worse -- the comparison output can become garbled to the point of being unreadable.

For documents with important table content -- pricing schedules, SLA matrices, milestone deliverables -- you should verify table comparisons manually rather than relying solely on Word's output. Open both documents side by side and check the tables directly.

Document corruption on complex files

On documents with complex formatting, embedded objects, content controls, or large numbers of tracked changes already present, Word Compare can occasionally produce a corrupted output file. Symptoms include missing content, garbled formatting, or Word crashing during the comparison process. This is rare, but it happens enough that you should always verify the comparison output against the source documents if anything looks off.

If Word crashes or produces a corrupted comparison, try accepting all tracked changes in both source documents first, then re-running the comparison on the clean versions. This eliminates the complexity of comparing tracked-changes-on-tracked-changes, which is often what triggers the issue.

No importance classification

Every change in a Word comparison gets the same visual treatment. A deleted comma looks identical to a deleted limitation of liability. A font change competes for the same attention as a modified payment term. There is no filtering, no priority ranking, no way to ask "show me just the changes that affect obligations or financial terms."

On a document with 15 changes, this is manageable. On a document with 150 changes after a template conversion, it means you are the classification engine. You review every change with equal effort and use your own judgment to decide what matters. That works, but it is slow and fatiguing -- and fatigue is where important changes get missed.

Tips for cleaner Word comparisons

You cannot eliminate Word Compare's limitations, but you can reduce their impact. These are practical steps that make the output more useful.

Use the same template

The single most effective thing you can do. If both documents use the same Word template (same styles, same fonts, same spacing), the comparison will have zero or near-zero formatting noise. Before sending a draft, consider sending your template with it, or asking the counterparty to make their edits in your file rather than copying content into theirs.

Accept all existing tracked changes first

If either document already contains tracked changes from previous editing rounds, accept all of them before running the comparison. Comparing a document with tracked changes against a clean document (or against another document with different tracked changes) produces confusing output because Word is comparing intermediate editing states rather than final content.

To clean a document: open it, go to Review, click the dropdown arrow next to Accept, and choose "Accept All Changes." Then save. Do the same for the other document. Now compare the two clean versions.

Remove comments before comparing

Comments from previous rounds can clutter the comparison output. If you do not need to compare comments between versions, delete all comments from both documents before running the comparison. Go to Review, click the dropdown arrow next to Delete (in the Comments group), and choose "Delete All Comments in Document."

Compare in stages for multi-version documents

If a document went through several rounds of revision (Version 1 to Version 2 to Version 3), do not compare Version 1 directly against Version 3 unless that is specifically what you need. The comparison will show every change across all rounds, which can be overwhelming and makes it impossible to see what changed in the most recent round.

Instead, compare Version 2 against Version 3 to see the latest changes. If you need the full history, compare Version 1 against Version 2 separately, then Version 2 against Version 3. Two focused comparisons are easier to review than one massive one.

Save the comparison with a clear file name

When you save the comparison document, use a file name that identifies what was compared and when. Something like "Agreement_v2_vs_v3_comparison_2026-03-18.docx" is far more useful than "Compare Result 1.docx" when you come back to it a week later or need to share it with a colleague.

Check tables manually

For any document with tables containing financial terms, SLA metrics, or schedule information, do not rely solely on Word's table comparison. Open both source documents side by side and verify the tables directly. This takes a few extra minutes but catches misalignments that Word's comparison might obscure.

When Word Compare is enough

Word Compare is genuinely the right tool for many situations. It is free, it is already on your computer, and for straightforward comparisons it works well. Do not switch to a more expensive tool if Word Compare covers your needs.

Word Compare works well when:

• The document is short (under 10-15 pages). On a short document, even a noisy comparison is manageable. You can review every change individually in a few minutes.
• Both versions use the same template. No template mismatch means no formatting noise. The comparison output is clean and focused on content changes.
• The document has no tables or simple tables. If the contract is text-only or has basic tables without merged cells or row insertions, Word's comparison handles it reliably.
• You compare documents occasionally. If you run a comparison a few times a month, the friction is minimal. The time spent dealing with Word's quirks is small in absolute terms.
• The risk level is moderate. For standard NDAs, simple service agreements, and low-value contracts, the consequences of missing a minor change are manageable. Word Compare catches all text changes, and that is usually sufficient.

If your situation matches most of these criteria, Word Compare is a perfectly reasonable choice. Spend your budget elsewhere.

How dedicated comparison tools improve on Word's approach

When Word Compare is not enough -- when the documents are long, the formatting changed, the tables are complex, or the stakes are high -- dedicated comparison tools address the specific gaps we described above. Here is what they do differently.

Semantic comparison and change classification

Instead of treating every difference the same, dedicated tools classify changes by type and significance. A formatting change is labeled as formatting. A text change to a financial term is flagged as financially significant. A changed defined term is connected to every clause that uses it. This classification lets you review the 10 substantive changes first and the 140 formatting changes later (or not at all, depending on your workflow).

Formatting noise filtering

Rather than the all-or-nothing toggle in Word (show all formatting changes or hide all of them), dedicated tools can separate formatting changes from content changes and present them independently. You see that formatting changed, you can inspect it if you want to, but it does not compete for attention with the substantive edits. The formatting changes are still there -- nothing is hidden -- but they are organized separately.

Move detection

When a paragraph or clause is relocated within the document, dedicated tools can identify it as a move rather than showing a deletion and an unrelated insertion pages apart. This is important for contract review because a moved clause changes legal context. A limitation of liability in the general terms section has a different scope than the same clause nested under a specific service description. Move detection makes that repositioning visible as a single event.

Structural document comparison

Word Compare works on extracted text. Dedicated tools that parse the .docx format directly can compare the actual document structure: paragraph hierarchy, heading levels, list nesting, table layout, and style definitions. This structural awareness is what enables formatting classification, move detection, and reliable table comparison. It is the difference between comparing text and comparing documents.

If you are hitting the limitations described in this post regularly -- formatting noise, table issues, move blindness, flat change presentation -- a dedicated tool addresses those specific problems.

Try Clausul if you want to see how a semantic comparison handles a document that gives Word Compare trouble. Upload the same two documents you would compare in Word and see the difference in the output.

Frequently asked questions

What is a redline comparison in Word?

A redline comparison is a document that shows the differences between two versions of a file using tracked changes markup. In Word, you create one by using Review > Compare > Compare Documents, which takes two .docx files and produces a third document with insertions shown in colored underlined text and deletions shown in strikethrough. The term "redline" comes from the historical practice of marking changes in red ink on printed documents. In modern legal practice, "redline" and "blackline" are used interchangeably to mean any comparison document that shows what changed between versions.

Can Word Compare detect formatting changes?

Yes, if you leave the "Formatting" checkbox enabled in the Compare settings dialog. Word will flag differences in font, size, color, spacing, indentation, and paragraph styles. The problem is that Word treats every formatting change with the same visual weight as content changes. If the counterparty applied a different template, you may see dozens or hundreds of formatting markups mixed in with the substantive text edits. You can uncheck "Formatting" to hide them entirely, but then you lose visibility into formatting changes that might be meaningful, such as a changed heading level or modified indentation that affects clause structure.

Why does Word Compare show so many changes that are not real edits?

Word Compare detects every character-level and formatting-level difference between two documents. When the two versions were created or edited in different environments (different templates, different default fonts, different Normal style definitions), Word faithfully reports all of those differences even though no human intentionally made them. Template mismatches are the most common cause. If one party uses Calibri 11pt with 1.15 line spacing and the other uses Times New Roman 12pt with single spacing, every paragraph will show formatting differences. These are real differences in the file, but they are not intentional edits, and Word has no way to distinguish the two.

How do I compare two Word documents without Track Changes?

Use Review > Compare > Compare Documents. This feature works on any two .docx files regardless of whether Track Changes was turned on during editing. It compares the final content of both files and produces a new document with tracked changes showing the differences. This is independent of Track Changes: it compares the documents as they are, not as they were edited. This is useful when you receive a "clean" version with no tracked changes and need to verify what actually changed from your last version.

Does Word Compare work for PDF files?

No. Word Compare only works with Word-format files (.docx, .doc). If you have PDF files, you need to either convert them to .docx first (which introduces conversion artifacts that will show up as false differences) or use a comparison tool that supports PDF natively. Converting PDFs to Word for comparison is unreliable for legal documents because the conversion changes formatting, table layout, and sometimes even text content. If both documents originated as Word files, compare the original .docx versions rather than PDF exports.

What is the difference between Compare and Combine in Word?

Compare takes two documents and produces a new document showing the differences as tracked changes. It treats one document as the "original" and one as the "revised," and the output shows what changed between them. Combine is designed for merging edits from multiple reviewers. It takes two documents that both contain tracked changes and merges those tracked changes into a single document. For redline comparison (seeing what changed between two versions), use Compare. For consolidating feedback from multiple reviewers who each marked up the same base document, use Combine.

---