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Over-generalized fear is a maladaptive response to harmless stimuli or situations characteristic of posttraumatic stress disorder (PTSD) and other anxiety disorders. The dorsal dentate gyrus (dDG) contains engram cells that play a crucial role in accurate memory retrieval. However, the coordination mechanism of neuronal subpopulations within the dDG network during fear generalization is not well understood. Here, with the Tet-off system combined with immunostaining and two-photon calcium imaging, we report that dDG fear engram cells labeled in the conditioned context constitutes a significantly higher proportion of dDG neurons activated in a similar context where mice show generalized fear. The activation of these dDG fear engram cells encoding the conditioned context is both sufficient and necessary for inducing fear generalization in the similar context. Activities of mossy cells in the ventral dentate gyrus (vMCs) are significantly suppressed in mice showing fear generalization in a similar context, and activating the vMCs-dDG pathway suppresses generalized but not conditioned fear. Finally, modifying fear memory engrams in the dDG with "safety" signals effectively rescues fear generalization. These findings reveal that the competitive advantage of dDG engram cells underlies fear generalization, which can be rescued by activating the vMCs-dDG pathway or modifying fear memory engrams, and provide novel insights into the dDG network as the neuronal basis of fear generalization. Fear generalization is a maladaptive response to harmless stimuli or situations that is characteristic of posttraumatic stress disorder and other anxiety disorders. This study shows that competition between engram and non-engram cells in the dentate gyrus determines whether fear generalization occurs. [ABSTRACT FROM AUTHOR]