Combining beta-blockers with exposure therapy has been advocated to reduce fear, yet experimental studies combining beta-blockers with memory reactivation have had contradictory results. We explored how beta-blockade might affect the course of safety learning and the subsequent return of fear in a double-blind placebo-controlled functional magnetic resonance imaging study in humans (N=46). A single dose of propranolol before extinction learning caused a loss of conditioned fear responses, and prevented the subsequent return of fear and decreased explicit memory for the fearful events in the absence of drug. Fear-related neural responses were persistently attenuated in the dorsal medial prefrontal cortex (dmPFC), increased in the hippocampus 24 h later, and correlated with individual behavioral indices of fear. Prediction error-related responses in the ventral striatum persisted during beta-blockade. We suggest that this pattern of results is most consistent with a model where beta-blockade can prevent the return of fear by (i) reducing retrieval of fear memory, via the dmPFC and (ii) increasing contextual safety learning, via the hippocampus. Our findings suggest that retrieval of fear memory and contextual safety learning form potential mnemonic target mechanisms to optimize exposure-based therapy with beta-blockers.