The dentate gyrus (DG) of the hippocampus encodes contextual information associated with fear, and cell activity in the DG is required for acquisition and extinction of contextual fear. However, the underlying molecular mechanisms are not fully understood. Here we show that mice deficient for peroxisome proliferator-activated receptor-α (PPARα) exhibited a slower rate of contextual fear extinction. Furthermore, selective deletion of PPARα in the DG attenuated, while activation of PPARα in the DG by local infusion of aspirin facilitated extinction of contextual fear. The intrinsic excitability of DG granule neurons was reduced by PPARα deficiency but increased by activation of PPARα with aspirin. Using RNA-Seq transcriptome we found that the transcription level of neuropeptide S receptor 1 (Npsr1) was tightly correlated with PPARα activation. Our results provide evidence that PPARα plays an important role in regulating DG neuronal excitability and contextual fear extinction.