Learning valence-based responses to favorable and unfavorable options requires judgments of the relative value of the options, a process necessary for species survival. We found, using engineered mice, that circuit connectivity and function of the striosome compartment of the striatum are critical for this type of learning. Calcium imaging during valence-based learning exhibited a selective correlation between learning and striosomal but not matrix signals. This striosomal activity encoded discrimination learning and was correlated with task engagement, which, in turn, could be regulated by chemogenetic excitation and inhibition. Striosomal function during discrimination learning was disturbed with aging and severely so in a mouse model of Huntington’s disease. Anatomical and functional connectivity of parvalbumin-positive, putative fast-spiking interneurons (FSIs) to striatal projection neurons was enhanced in striosomes compared with matrix in mice that learned. Computational modeling of these findings suggests that FSIs can modulate the striosomal signal-to-noise ratio, crucial for discrimination and learning. Display omitted •Striosomal, not matrix, striatal activity is shaped with valence-based learning•Striosomal, not matrix, DREADD manipulation opposingly modulates task engagement•Striosome-selective circuit decline occurs during aging and in mouse model of HD•Interneuron-striosome connectivity modulates SNR, and this increases with learning Friedman et al. find that specialized regions of the striatum, a key part of the brain’s movement and motivation control system, are essential for learning about the values of good and bad outcomes of decisions. The learning signals in striosomes scale according to subjective value and are vulnerable to decline with aging and in neurodegenerative disorders.