Mild traumatic brain injury (mTBI) increases the risk of affective disorders, anxiety and substance use disorder. The lateral habenula (LHb) plays an important role in pathophysiology of psychiatric disorders. Recently, we demonstrated a causal link between mTBI-induced LHb hyperactivity due to excitation/inhibition (E/I) imbalance and motivational deficits in male mice using a repetitive closed head injury mTBI model. A major neuromodulatory system that is responsive to traumatic brain injuries, influences affective states and also modulates LHb activity is the dynorphin/kappa opioid receptor (Dyn/KOR) system. However, the effects of mTBI on KOR neuromodulation of LHb function are unknown. Here, we first used retrograde tracing in male and female Cre mouse lines and identified several major KOR-expressing and two prominent Dyn-expressing inputs projecting to the mouse LHb, highlighting the medial prefrontal cortex (mPFC) and the ventromedial nucleus of the hypothalamus (VMH) as the main LHb-projecting Dyn inputs that regulate KOR signaling to the LHb. We then functionally evaluated the effects of in vitro KOR modulation of spontaneous synaptic activity within the LHb of male and female sham and mTBI mice at 4 week post-injury. We observed sex-specific differences in spontaneous release of glutamate and GABA from presynaptic terminals onto LHb neurons with higher levels of presynaptic glutamate and GABA release in females compared to male mice. However, KOR effects on the spontaneous E/I ratios and synaptic drive ratio within the LHb did not differ between male and female sham and mTBI mice. KOR activation generally suppressed spontaneous glutamatergic transmission without altering GABAergic transmission, resulting in a significant but sex-similar reduction in net spontaneous E/I and synaptic drive ratios in LHb neurons of sham mice. Following mTBI, while responses to KOR activation at LHb glutamatergic synapses remained intact, LHb GABAergic synapses acquired an additional sensitivity to KOR-mediated inhibition where we observed a reduction in GABA release probability in response to KOR stimulation in LHb neurons of mTBI mice. Further analysis of percent change in spontaneous synaptic ratios induced by KOR activation revealed that independent of sex mTBI switches KOR-driven synaptic inhibition of LHb neurons (normally observed in sham mice) in a subset of mTBI mice toward synaptic excitation resulting in mTBI-induced divergence of KOR actions within the LHb. Overall, we uncovered the sources of major Dyn/KOR-expressing synaptic inputs projecting to the mouse LHb. We demonstrate that an engagement of intra-LHb Dyn/KOR signaling provides a global KOR-driven synaptic inhibition within the mouse LHb independent of sex. The additional engagement of KOR-mediated action on LHb GABAergic transmission by mTBI could contribute to the E/I imbalance after mTBI, with Dyn/KOR signaling serving as a disinhibitory mechanism for LHb neurons of a subset of mTBI mice.