Fear extinction is an important form of emotional learning, and affects neural plasticity. Cue fear extinction is a classical form of inhibitory learning that can be used as an exposure-based treatment for phobia, because the long-term extinction memory produced during cue fear extinction can limit the over-expression of fear. The expression of this inhibitory memory partly depends on the context in which the extinction learning occurs. Studies such as transient inhibition, electrophysiology and brain imaging have proved that the hippocampus – an important structure in the limbic system – facilitates memory retrieval by contextual cues. Mediation of the hippocampus-medial prefrontal lobe circuit may be the neurobiological basis of this process. This article has reviewed the role of the hippocampus in the learning and retrieval of fear extinction. Contextual modulation of fear extinction may rely on a neural network consisting of the hippocampus, the medial prefrontal cortex and the amygdala.