Memory retrieval of fearful experiences is essential for survival, but can be maladaptive if not appropriately suppressed. Fear memories can be acquired through contextual fear conditioning (CFC) which relies on the hippocampus. The thalamic subregion Nucleus Reuniens (NR) is necessary for contextual fear extinction and strongly projects to hippocampal subregion CA1. However, the NR-CA1 pathway has not been investigated during behavior, leaving unknown its role in contextual fear memory retrieval. We implement a novel head-restrained virtual reality CFC paradigm, and show that inactivation of the NR-CA1 pathway prolongs fearful freezing epochs, induces fear generalization, and delays extinction. We use in vivo sub-cellular imaging to specifically record NR-axons innervating CA1 before and after CFC. We find NR-axons become selectively tuned to freezing only after CFC, and this activity is well-predicted by an encoding model. We conclude that the NR-CA1 pathway actively suppresses fear responses by disrupting ongoing hippocampal-dependent contextual fear memory retrieval.