We identified the Grp gene, encoding gastrin-releasing peptide, as being highly expressed both in the lateral nucleus of the amygdala, the nucleus where associations for Pavlovian learned fear are formed, and in the regions that convey fearful auditory information to the lateral nucleus. Moreover, we found that GRP receptor (GRPR) is expressed in GABAergic interneurons of the lateral nucleus. GRP excites these interneurons and increases their inhibition of principal neurons. GRPR-deficient mice showed decreased inhibition of principal neurons by the interneurons, enhanced long-term potentiation (LTP), and greater and more persistent long-term fear memory. By contrast, these mice performed normally in hippocampus-dependent Morris maze. These experiments provide genetic evidence that GRP and its neural circuitry operate as a negative feedback regulating fear and establish a causal relationship between Grpr gene expression, LTP, and amygdala-dependent memory for fear.