AbstractAimsWe often experience dreams of strong irrational and negative emotional contents with postural muscle paralysis during rapid eye movement (REM) sleep, but how REM sleep is generated and its function remain unclear. In this study, we investigate whether the dorsal pontine sub‐laterodorsal tegmental nucleus (SLD) is necessary and sufficient for REM sleep and whether REM sleep elimination alters fear memory.MethodsTo investigate whether activation of SLD neurons is sufficient for REM sleep induction, we expressed channelrhodopsin‐2 (ChR2) in SLD neurons by bilaterally injecting AAV1‐hSyn‐ChR2‐YFP in rats. We next selectively ablated either glutamatergic or GABAergic neurons from the SLD in mice in order to identify the neuronal subset crucial for REM sleep. We finally  investigated the role of REM sleep in consolidation of fear memory using rat model with complete SLD lesions.ResultsWe demonstrate the sufficiency of the SLD for REM sleep by showing that photo‐activation of ChR2 transfected SLD neurons selectively promotes transitions from non‐REM (NREM) sleep to REM sleep in rats. Diphtheria toxin‐A (DTA) induced lesions of the SLD in rats or specific deletion of SLD glutamatergic neurons but not GABAergic neurons in mice completely abolish REM sleep, demonstrating the necessity of SLD glutamatergic neurons for REM sleep. We then show that REM sleep elimination by SLD lesions in rats significantly enhances contextual and cued fear memory consolidation by 2.5 and 1.0 folds, respectively, for at least 9 months. Conversely, fear conditioning and fear memory trigger doubled amounts of REM sleep in the following night, and chemo‐activation of SLD neurons projecting to the medial septum (MS) selectively enhances hippocampal theta activity in REM sleep; this stimulation immediately after fear acquisition reduces contextual and cued fear memory consolidation by 60% and 30%, respectively.ConclusionSLD glutamatergic neurons generate REM sleep and REM sleep and SLD via the hippocampus particularly down‐regulate contextual fear memory.