Microsoft Word 2007 can work with documents in three file formats. The native Word 2007 format has the new file extension ".docx". Whenever you save a file in this format, it can use the full range of facilities and features found in Word 2007, with the exception of macros. If a Word 2007 document contains any macros, it must be saved in a different file format using the extension ".docm".

As well as these two native formats, Word 2007 is also capable of both opening and creating new documents using the ".doc" file extension, the file extension found in previous versions of Word. Word 2007 files saved with this file extension will not have access to the complete range of features found with in Word 2007. Features which were introduced in 2007, such as Themes, will not be available in any documents saved with the file extension ".doc".

When you save a Word 2007 document for the first-time, these three options are available in a drop-down menu labelled "Save As Type". Unless you specify otherwise, the new file will be saved with the file extension ".docx". However, if you find yourself exchanging documents with a person using an older version of Word, you can save the document using the file extension ".doc", which is backward compatible.

When you open any document containing a macro, by default, Word displays a security message notifying you that macros have been disabled. You can then, optionally, click on Options and enable the content if we want to.

Whenever you open a file created in a previous version of Microsoft Word, Word 2007 doesn't automatically convert the file to its new format. For convenience, it leaves it in the ".doc" format and goes into a special working mode called "Compatibility Mode". (It even displays the words "Compatibility Mode" in brackets next to the document title.)

While the file is in compatibility mode, you can still continue working on it. You can make changes to the document and you can save those changes. The file will remain in the old format and remain in compatibility mode. However, certain features, such as Themes, will not be available when working in compatibility mode. If you position the mouse over the Themes area of the Page Layout Tab, a tool tip appears saying "This document has been opened in compatibility mode. To use this feature convert your document to a new file format. Click on the Office button and then click convert." If you follow this advice "Compatibility Mode" disappears from the title bar and when we save the file Word changes the file extension and the document will then have been fully converted to the Word 2007 format.

If you work in an environment where both Word 2007 and older versions are in use, then Microsoft may have provided another solution. You have the option of installing an update called the Office Compatibility Pack. This makes it possible for previous versions of all the Microsoft Office packages to open the new Office 2007 file formats.