How our internal state is merged with our visual perception of an impending threat to drive an adaptive behavioural response is not known. Mice respond to visual threats by either freezing or seeking shelter. Here we show that nuclei of the ventral midline thalamus (vMT), the xiphoid nucleus (Xi) and nucleus reuniens (Re), represent crucial hubs in the network controlling behavioural responses to visual threats. The Xi projects to the basolateral amygdala to promote saliency-reducing responses to threats, such as freezing, whereas the Re projects to the medial prefrontal cortex (Re→mPFC) to promote saliency-enhancing, even confrontational responses to threats, such as tail rattling. Activation of the Re→mPFC pathway also increases autonomic arousal in a manner that is rewarding. The vMT is therefore important for biasing how internal states are translated into opposing categories of behavioural responses to perceived threats. These findings may have implications for understanding disorders of arousal and adaptive decision-making, such as phobias, post-traumatic stress and addictions.