Contextual information provides a unique temporal and spatial signature for a given experience, specifying the “where” and “when” of episodic memories. Cholinergic neuromodulation in the hippocampus controls the salience of background context memory, which acquired in the presence of elemental stimuli predicting an aversive reinforcement. This allows an individual to prevent excessive responding to contextual reminders when a cue-specific memory has been formed. However, the involved intrahippocampal circuits and their relation to the cholinergic septal afferences have not been resolved so far. With pharmacogenetic inhibition we now demonstrate that a group of local circuit neurons, the so-called hilar perforant path-associated (HIPP) cells of the dentate gyrus, mediate the devaluation of background context memory during Pavlovian fear conditioning. The salience adjustment is sensitive to reduction of hilar neuropeptide Y (NPY) expression via dominant negative CREB expression in HIPP cells and to acute blockage of NPY-Y1 receptors in the dentate gyrus during conditioning. We show that NPY transmission and HIPP cell activity contribute to inhibitory effects of acetylcholine in the dentate gyrus and that M1 muscarinic receptors mediate the cholinergic activation of HIPP cells as well as their control of background context salience. Our data provide evidence for a peptidergic local circuit in the dentate gyrus that mediates the cholinergic encoding of background context salience during fear memory acquisition.
  This circuit may be critically involved in pathology development of post traumatic stress disorder, where escalation of background context fear has been implicated in the occurrence of intrusive memories and attenuated fear extinction.