Prefrontal cortical (PFC) circuits provide top-down control of threat reactivity. This includes ventromedial PFC (vmPFC) circuitry, which plays a role in suppressing fear-related behavioral states. Dynorphin (Dyn) has been implicated in mediating negative affect and maladaptive behaviors induced by severe threats and is expressed in limbic circuits, including the vmPFC. However, there is a critical knowledge gap in our understanding of how vmPFC Dyn-expressing neurons and Dyn transmission detect threats and regulate expression of defensive behaviors. Here, we demonstrate that Dyn cells are broadly activated by threats and release Dyn locally in the vmPFC to limit passive defensive behaviors. We further demonstrate that vmPFC Dyn-mediated signaling promotes a switch of vmPFC networks to a fear-related state. In conclusion, we reveal a previously unknown role of vmPFC Dyn neurons and Dyn neuropeptidergic transmission in suppressing defensive behaviors in response to threats via state-driven changes in vmPFC networks. Display omitted •vmPFCDyn neurons are activated by threats and threat-predictive cues•vmPFCDyn neurons rapidly release Dyn in response to threats and their predictors•vmPFCDyn signaling opposes threat-induced passive defensive behaviors•Dyn signaling promotes threat-evoked state transitions in vmPFC networks Wang et al. demonstrate that ventromedial prefrontal cortex (vmPFC) prodynorphin cells are broadly activated by threats and release dynorphin to limit passive defensive behaviors. Furthermore, they demonstrate that dynorphin neuropeptidergic transmission suppresses passive defensive behaviors by facilitating a switch in vmPFC networks to a persistent fear-related state driven by acute threats.