Click Site Actions -> Site Settings to enter the management panel.
Click Site Content Types under Galleries category.
Click Create in order to create a new content type.
Type in Name Description, choose Document Content Types -> Document as the parent content type. By default, the template for Document is document from Office word.
Put the new content type into Custom Content Types group and click OK.
Now you have created a content type with template of word file.
Change the template
Click Site Actions -> Site Settings to enter the management panel.
Click Site Content Types under Galleries category.
Click the content type you created just now under Custom Content Types category.
Click Advanced Settings.
Under Document Template category, you could enter the URL of an existing document template. Using this method, please make sure you type in a correct related URL address. In additional, a more easy way is that creating an empty Office file locally and upload it as the template.
Make sure Read Only category is marked as No.
Click OK.
Add custom content type into New Document list
Enter your document library.
Click Library -> Edit Library, as a result sharepoint online will open sharepoint designer in your local computer.
Under Settings category, mark Allow Management of Content Types.
Under Content Types category, click Add… to add custom content type you created just now.
Make sure Show on New Menu is marked as Yes for new added items.
Back to your sharepoint site, you could create several document type in the related library now.
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