We have previously reported that the miR-181a/Prox1/Notch1 pathway mediates the effect of morphine on modulating lineage-specific differentiation of adult neural stem/progenitor cells (NSPCs) via a PKCε-dependent pathway, whereas fentanyl shows no such effect. However, the role of the PKCε/Prox1 pathway in mediating drug-associated contextual memory remains unknown. The current study investigated the effect of PKCε/Prox1 on morphine-induced inhibition of adult neurogenesis and drug-associated contextual memory in mice, while the effect of fentanyl was tested simultaneously. By using BrdU labeling, we were able to examine the lineages of differentiated NSPCs in adult DG. PKCε knockout blocked morphine's effects on inducing in vivo astrocyte-preferential differentiation of NSPCs, but did not alter NSPC lineages upon fentanyl treatment. Inhibited adult neurogenesis further resulted in prolonged extinction and enhanced reinstatement of morphine-induced CPP, as well as prolonged extinction of space reference memory indicated by the Morris water maze paradigm. However, after fentanyl administration, no significant changes were found between wild-type and PKCε knockout mice, during either CPP or water maze tasks. When the lentivirus encoding Nestin-promoter-controlled Prox1 cDNA was injected into hippocampi of wildtype and PKCε knockout adult mice to modulate PKCε/Prox1 activity, similar effects were discovered in adult mice injected with lentivirus encoding Prox1, and more dramatic effects were found in PKCε knockout mice with concurrent Prox1 overexpression. In conclusion, morphine mediates lineage-specific NSPC differentiation, inhibits adult neurogenesis and regulates contextual memory retention via the PKCε/Prox1 pathway, which are implicated in the eventual context-associated relapse.