The ability to rapidly adapt to novel situations is essential for survival, and this flexibility is impaired in many neuropsychiatric disorders1. Thus, understanding whether and how novelty prepares, or primes, brain circuitry to facilitate cognitive flexibility has important translational relevance. Exposure to novelty recruits the hippocampus and medial prefrontal cortex (mPFC)2 and may prime hippocampal-prefrontal circuitry for subsequent learning-associated plasticity. Here we show that novelty resets the neural circuits that link the ventral hippocampus (vHPC) and the mPFC, facilitating the ability to overcome an established strategy. Exposing mice to novelty disrupted a previously encoded strategy by reorganizing vHPC activity to local theta (4-12 Hz) oscillations and weakening existing vHPC-mPFC connectivity. As mice subsequently adapted to a new task, vHPC neurons developed new task-associated activity, vHPC-mPFC connectivity was strengthened, and mPFC neurons updated to encode the new rules. Without novelty, however, mice adhered to their established strategy. Blocking dopamine D1 receptors (D1Rs) or inhibiting novelty-tagged cells that express D1Rs in the vHPC prevented these behavioural and physiological effects of novelty. Furthermore, activation of D1Rs mimicked the effects of novelty. These results suggest that novelty promotes adaptive learning by D1R-mediated resetting of vHPC-mPFC circuitry, thereby enabling subsequent learning-associated circuit plasticity.