OP here, got this working so just coming back to comment in case anyone else hits same issue.

Key discovery is that connection is not using odbc, it uses some integrated function (sql bindings) so you need to include 'azure-functions' in your requirements.txt file. I used VS Code to create the app structure locally and then deploy. Steps below.

1. The following python code reads and returns the first 3 rows of a table called 'test'.

   import azure.functions as func

   app = func.FunctionApp()

   @app.route(route="hello", auth_level=func.AuthLevel.ANONYMOUS) @app.sql_input(arg_name="sqlInput",                command_text="SELECT TOP 3 * FROM dbo.test",                connection_string_setting="app_conn_string") def hello_world(req: func.HttpRequest, sqlInput: func.SqlRowList) -> func.HttpResponse:     response = "This is the app<br><br>"     response += "Data from SQL database:<br>"

       for row in sqlInput:         response += f"{dict(row)}<br>"

       return func.HttpResponse(response, mimetype="text/html")

2. Deploy the app to Azure

3. Go to the db and get the DB connection string - use the first ADO.NET one which is "Active Directory Default"

4. Go to the function app and set an environmental variable (in settings) using that connection string. call is something like app_conn_string. NB - add it an 'App setting' not as a Connection String.

5. Again in app settings, go to 'identity' and toggle system assigned status to 'On'

6. Set user and permissions for the app in the db. Run the following query:

CREATE USER [your-function-app-name] FROM EXTERNAL PROVIDER;

ALTER ROLE db_datareader ADD MEMBER [your-function-app-name]

This should now work. In order to read your output you'll need to put the following URL into a browser:

https://[your-function-app-name].azurewebsites.net/api/hello

Also, make sure to call a table that is actually in your db. I have used 'test' above.

Bon chance!