Increased level of kynurenic acid is thought to contribute to the development of cognitive deficits in schizophrenia through an α7nAChR-mediated mechanism in the prefrontal cortex (PFC). However, it remains unclear to what extent disruption of PFC α7nAChR signaling impacts afferent transmission and its modulation of behavior. Using male rats, we found that PFC infusion of methyllycaconitine (MLA; α7nAChR antagonist) shifts ventral hippocampal-induced local field potential (LFP) suppression to LFP facilitation, an effect only observed in adults. Hippocampal stimulation can also elicit a GluN2B-mediated LFP potentiation (when PFC GABAAR is blocked) that is insensitive to MLA. Conversely, PFC infusion of MLA diminished the gain of amygdalar transmission, which is already enabled by postnatal day (P)30. Behaviorally, the impact of prefrontal MLA on trace fear-conditioning and extinction was also age related. While freezing behavior during conditioning was reduced by MLA only in adults, it elicited opposite effects in adolescent and adult rats during extinction as revealed by the level of reduced and increased freezing response, respectively. We next asked whether the late-adolescent onset of α7nAChR modulation of hippocampal inputs contributes to the age-dependent effect of MLA during extinction. Data revealed that the increased freezing behavior elicited by MLA in adult rats could be driven by a dysregulation of the GluN2B transmission in the PFC. Collectively, these results indicate that distinct neural circuits are recruited during the extinction of trace fear memory in adolescents and adults, likely because of the late-adolescent maturation of the ventral hippocampal-PFC functional connectivity and its modulation by α7nAChR signaling.SIGNIFICANCE STATEMENT Abnormal elevation of the astrocyte-derived metabolite kynurenic acid in the prefrontal cortex (PFC) is thought to impair cognitive functions in schizophrenia through an α7nAChR-mediated mechanism. Here, we found that prefrontal α7nAChR signaling is recruited to control the gain of hippocampal and amygdalar afferent transmission in an input-specific, age-related manner during the adolescent transition to adulthood. Behaviorally, prefrontal α7nAChR modulation of trace fear memory was also age-related, likely because of the late-adolescent maturation of the ventral hippocampal pathway and its recruitment of PFC GABAergic transmission enabled by local α7nAChR signaling. Collectively, these results reveal that distinct α7nAChR-sensitive neural circuits contribute to regulate behavior responses in adolescents and adults, particularly those requiring proper integration of hippocampal and amygdalar inputs by the PFC.