Correlated activity in the hippocampus drives synaptic plasticity that is necessary for the recruitment of neuronal ensembles underlying fear memory. Sustained neural activity, on the other hand, may trigger homeostatic adaptations. However, whether homeostatic plasticity affects memory function remains unknown. Here, we use optogenetics to induce cell autonomous homeostatic plasticity in CA1 pyramidal neurons and granule cells of the hippocampus. High-frequency spike trains applied for 10 min decreased the number of excitatory spine synapses and increased the number of inhibitory shaft synapses. This activity stopped dendritic spine formation via L-type voltage-dependent calcium channel activity and protein synthesis. Applied selectively to the ensemble of granule cells encoding a contextual fear memory, the spike trains impaired memory recall and facilitated extinction. Our results indicate that homeostatic plasticity triggered by optogenetic neuronal firing alters the balance between excitation and inhibition in favor of memory extinction.