Extinction memory retrieval is influenced by spatial contextual information that determines responding to conditioned stimuli (CS). Yet, it is poorly understood if contextual representations are imbued with emotional values to support memory selection. Here, we performed activity-dependent engram-tagging, and in vivo single-unit electrophysiological recordings from the ventral hippocampus (vH) while optogenetically manipulating basolateral amygdala (BLA) inputs during the formation of cued fear extinction memory. During fear extinction when CS acquire safety properties, we found that CS-related activity in the vH reactivated during sleep consolidation and was strengthened upon memory retrieval. Moreover, fear extinction memory was facilitated when the extinction context exhibited precise coding of its affective zones. Finally, these activity patterns along with the retrieval of the fear extinction memory were dependent on glutamatergic transmission from the BLA during extinction learning. Thus, fear extinction memory relies on the formation of contextual and stimulus safety representations in the vH instructed by the BLA.