Login failed error when connecting to database from WCF service?

Your clientCredentialType is 'Windows', I suspect the WCF service is using delegation, which is to say that the user credentials from the client are being used at the service to try and talk to the database. Put another way, if the client application is running on a Windows box with the logged in user being DomainA\SomeUser, the credentials in the service will be DomainA\SomeUser, not the account configured in the IIS application pool. This link should be able to get you running: Wcf impersonation.

I answer generally because your question is abstract - no operating system, IIS, SQL Server versions/editions/modes, no details on configuration, error, etc .

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