Benzodiazepines, commonly used for anxiolytics, hinder conditioned fear extinction, and the underlying circuit mechanisms are unclear. Utilizing remimazolam, an ultra-short-acting benzodiazepine, we reveal its impact on the thalamic nucleus reuniens (RE) and interconnected hippocamposeptal circuits during fear extinction. Systemic or RE-specific administration of remimazolam impedes fear extinction by reducing RE activation through A type GABA receptors. Remimazolam enhances long-range GABAergic inhibition from lateral septum (LS) to RE, underlying the compromised fear extinction. RE projects to ventral hippocampus (vHPC), which in turn sends projections characterized by feed-forward inhibition to the GABAergic neurons of the LS. This is coupled with long-range GABAergic projections from the LS to RE, collectively constituting an overall positive feedback circuit construct that promotes fear extinction. RE-specific remimazolam negates the facilitation of fear extinction by disrupting this circuit. Thus, remimazolam in RE disrupts fear extinction caused by hippocamposeptal intermediation, offering mechanistic insights for the dilemma of combining anxiolytics with extinction-based exposure therapy.