Fear extinction refers to the ability to adapt as situations change by learning to suppress a previously learned fear. This process involves a gradual reduction in the capacity of a fear-conditioned stimulus to elicit fear by presenting the conditioned stimulus repeatedly on its own. Fear extinction is context-dependent and is generally considered to involve the establishment of inhibitory control of the prefrontal cortex over amygdala-based fear processes. In this paper, we review research progress on the neural basis of fear extinction with a focus on the role of the amygdala and the prefrontal cortex. We evaluate two competing hypotheses for how the medial prefrontal cortex inhibits amygdala output. In addition, we present new findings showing that lesions of the basal amygdala do not affect fear extinction. Based on this result, we propose an updated model for integrating hippocampal-based contextual information with prefrontal-amygdala circuitry. (Contains 5 figures.)