The ability to extinguish conditioned fear memory is critical for adaptive control of fear response, and its impairment is a hallmark of emotional disorders like post-traumatic stress disorder (PTSD). Fear extinction is thought to take place when animals form a new memory that suppresses the original fear memory. However, little is known about the nature and the site of formation and storage of this new extinction memory. Here we demonstrate that a fear extinction memory engram is formed and stored in a genetically distinct basolateral amygdala (BLA) neuronal population that drives reward behaviors and antagonizes the BLA’s original fear neurons. Activation of fear extinction engram neurons and natural reward-responsive neurons overlap significantly in the BLA. Furthermore, these two neuronal subsets are mutually interchangeable in driving reward behaviors and fear extinction behaviors. Thus, fear extinction memory is a newly formed reward memory. Display omitted •Fear extinction memory requires formation of new engram cells•Fear extinction engram cells are formed and stored in BLA Ppp1r1b+ neurons•Fear extinction engram cells and reward cells are functionally interchangeable•Omission of expected aversive stimuli is rewarding Zhang et al. demonstrate that fear extinction memory requires new engram cells to be formed and stored in BLA neurons that drive reward behaviors. Fear extinction engram cells and reward-responsive cells are functionally equivalent in driving reward behaviors and fear extinction. Fear extinction memory is a newly formed reward memory.