Maladaptive aggressive behaviour is associated with a number of neuropsychiatric disorders1and is thought to result partly from the inappropriate activation of brain reward systems in response to aggressive or violent social stimuli2. Nuclei within the ventromedial hypothalamus3,4,5, extended amygdala6and limbic7circuits are known to encode initiation of aggression; however, little is known about the neural mechanisms that directly modulate the motivational component of aggressive behaviour8. Here we established a mouse model to measure the valence of aggressive inter-male social interaction with a smaller subordinate intruder as reinforcement for the development of conditioned place preference (CPP). Aggressors develop a CPP, whereas non-aggressors develop a conditioned place aversion to the intruder-paired context. Furthermore, we identify a functional GABAergic projection from the basal forebrain (BF) to the lateral habenula (lHb) that bi-directionally controls the valence of aggressive interactions. Circuit-specific silencing of GABAergic BF–lHb terminals of aggressors with halorhodopsin (NpHR3.0) increases lHb neuronal firing and abolishes CPP to the intruder-paired context. Activation of GABAergic BF–lHb terminals of non-aggressors with channelrhodopsin (ChR2) decreases lHb neuronal firing and promotes CPP to the intruder-paired context. Finally, we show that altering inhibitory transmission at BF–lHb terminals does not control the initiation of aggressive behaviour. These results demonstrate that the BF–lHb circuit has a critical role in regulating the valence of inter-male aggressive behaviour and provide novel mechanistic insight into the neural circuits modulating aggression reward processing.