Increased fear memory generalization is associated with post-traumatic stress disorder, but the circuit mechanisms that regulate memory specificity remain unclear. Here, we define a neural circuit, composed of the medial prefrontal cortex, the N. reuniens, and the hippocampus, that controls fear memory generalization. Inactivation of prefrontal inputs into the N. reuniens or direct silencing of N. reuniens projections enhanced fear memory generalization, whereas constitutive activation of N. reuniens neurons decreased memory generalization. Direct optogenetic activation of phasic and tonic action-potential firing of N. reuniens neurons during memory acquisition enhanced or reduced memory generalization, respectively. We propose that the N. reuniens determines the specificity and generalization of memory attributes for a particular context by processing information from the medial prefrontal cortex en route to the hippocampus.