One of the core symptoms in anxiety disorders is dysregulated fear response. It is crucial for psychologists and neuroscientists to understand how fear responses are enhanced and inhibited. Although oxytocin (OXT) was initially conceived as a prosocial molecule and mammalian neuropeptide that enhances cooperation and trust, later studies showed that it produces modulatory influence on fear responses. Therefore, OXT is now regarded as a promising pharmacological agent to boost treatment response in anxiety disorders. However, the effect of OXT on fear responses have been somewhat complex, and there are some contradictions among animal experiments and human studies. In this article, we summarize recent studies that employed animal models, brain region-specific manipulations and preclinical studies to explore the role of OXT in the acquisition and processing of fear response. We also discuss the methodological differences among these studies and review the potential factors that may contribute to the complicated effect of OXT on fear response. This review will help to promote the potential clinical application of OXT.