Oxytocin (OT) is a hypothalamic neuropeptide that modulates fear and anxiety-like behaviors. Dorsolateral bed nucleus of the stria terminalis (BNSTdl) plays a critical role in the regulation of fear and anxiety, and expresses high levels of OT receptor (OTR). However, the role of OTR neurotransmission within the BNSTdl in mediating these behaviors is unknown. Here, we used adult male Sprague-Dawley rats to investigate the role of OTR neurotransmission in the BNSTdl in the modulation of the acoustic startle response, as well as in the acquisition and consolidation of conditioned fear using fear potentiated startle (FPS) paradigm. Bilateral intra-BNSTdl administration of OT (100 ng) did not affect the acquisition of conditioned fear response. However, intra-BNSTdl administration of specific OTR antagonist (OTA), (d(CH2)51, Tyr(Me)2, Thr4, Orn8, des-Gly-NH29)-vasotocin, (200 ng), prior to the fear conditioning session, impaired the acquisition of cued fear, without affecting a non-cued fear component of FPS. Neither OTA, nor OT affected baseline startle or shock reactivity during fear conditioning. Therefore, the observed impairment of cued fear after OTA infusion resulted from the specific effect on the formation of cued fear. In contrast to the acquisition, neither OTA nor OT affected the consolidation of FPS, when administered after the completion of fear conditioning session. Taken together, these results reveal the important role of OTR neurotransmission in the BNSTdl in the formation of conditioned fear to a discrete cue. This study also highlights the role of the BNSTdl in learning to discriminate between threatening and safe stimuli.