Stressful and traumatic events can create aversive memories, which are a predisposing factor for anxiety disorders. The amygdala is critical for transforming such stressful events into anxiety, and the recently discovered neuropeptide S transmitter system represents a promising candidate apt to control these interactions. Here we test the hypothesis that neuropeptide S can regulate stress-induced hyperexcitability in the amygdala, and thereby can interact with stress-induced alterations of fear memory. Mice underwent acute immobilization stress (IS), and neuropeptide S and a receptor antagonist were locally injected into the lateral amygdala (LA) during stress exposure. Ten days later, anxiety-like behavior, fear acquisition, fear memory retrieval, and extinction were tested. Furthermore, patch-clamp recordings were performed in amygdala slices prepared ex vivo to identify synaptic substrates of stress-induced alterations in fear responsiveness. (1) IS increased anxiety-like behavior, and enhanced conditioned fear responses during extinction 10 days after stress, (2) neuropeptide S in the amygdala prevented, while an antagonist aggravated, these stress-induced changes of aversive behaviors, (3) excitatory synaptic activity in LA projection neurons was increased on fear conditioning and returned to preconditioning values on fear extinction, and (4) stress resulted in sustained high levels of excitatory synaptic activity during fear extinction, whereas neuropeptide S supported the return of synaptic activity during fear extinction to levels typical of non-stressed animals. Together these results suggest that the neuropeptide S system is capable of interfering with mechanisms in the amygdala that transform stressful events into anxiety and impaired fear extinction.