Chronic exposure to stress causes cognitive deficits, anxiety and depression. Earlier studies have suggested that the prefrontal cortex (PFC) and basolateral amygdala (BLA) can differentially modulate the stress-induced alterations either by their action on HPA axis or via direct reciprocal connections between them. The PFC dysfunction and BLA hypertrophy following stress are known to cause anxiety and affective symptoms. Recent studies indicate that inactivation of BLA projections to PFC remarkably decreases anxiety. However, the effect of BLA inactivation on stress-induced anxiety and associated volume loss in prelimbic (PrL) and anterior cingulate (ACC) subregions of PFC is not known. Accordingly, we evaluated the effect of BLA lesion or inactivation during chronic immobilization stress (CIS) on an approach-avoidance task and associated volume loss in the PFC. The stressed rats showed a significant volumetric reduction in layer I and II of the PrL and ACC. Interestingly, BLA lesion prior to stress prevented the volume loss in PrL and ACC. Further, BLA lesion blocked the anxiety-like behavior in stressed rats. However, in the absence of stress, BLA lesion increased the number of shocks as compared to controls. As BLA lesion produced an anticonflict effect, we performed temporary inactivation of BLA specifically during stress. Similar to BLA lesion, lidocaine-induced inactivation prevented the stress-induced volume loss and anxiety-like behavior. We demonstrate that inactivation of BLA during stress prevents CIS-induced anxiety and associated structural correlates in the PFC. The present study extends the hypothesis of amygdalar silencing as a possible management strategy for stress and associated disorders.