A mechanism for the extinction of the responses of hippocampal and dopaminergic neurons to repeated sensory stimuli is proposed, based on dopamine-dependent negative feedback in the hippocampus-basal ganglia-thalamus-hippocampus loop. Activation of hippocampal neurons evoked by a new stimulus facilitates the appearance of responses in dopaminergic neurons as a result of disinhibition via striopallidal cells of the nucleus accumbens and ventral pallidum. However, increases in dopamine levels and activation of D2 receptors on striopallidal cells, facilitating depression of hippocampal inputs, prevent disinhibition of dopaminergic neurons, such that their responses start to decline. Subsequent reductions in actions on D1 receptors lead to decreases in the efficiency of excitation both of neurons in hippocampal field CA1 and strionigral cells in the nucleus accumbens. The direct pathway via the basal ganglia mediates disinhibition of the thalamic nucleus reuniens, exciting neurons in field CA1, which leads to extinction of the responses of hippocampal neurons, decreases in disinhibition of dopaminergic cells, and further extinction of their responses.