Hippocampal hyperactivity is correlated with psychosis in schizophrenia patients and likely attributable to deficits in GABAergic signaling. Here we attempt to reverse this deficit by overexpression of the α5-GABAA receptor within the ventral hippocampus (vHipp). Indeed, this is sufficient to normalize vHipp activity and downstream alterations in dopamine neuron function in the MAM rodent model. This approach also attenuated behavioral deficits in cognitive flexibility. To understand the specific pathways that mediate these effects, we used chemogenetics to manipulate discrete projections from the vHipp to the nucleus accumbens (NAc) or prefrontal cortex (mPFC). We found that inhibition of the vHipp-NAc, but not the vHipp-mPFC pathway, normalized aberrant dopamine neuron activity. Conversely, inhibition of the vHipp-mPFC improved cognitive function. Taken together, these results demonstrate that restoring GABAergic signaling in the vHipp improves schizophrenia-like deficits and that distinct behavioral alterations are mediated by discrete projections from the vHipp to the NAc and mPFC.