Prefrontal cortical (PFC) circuits provide top-down control of threat reactivity. This includes ventromedial PFC (vmPFC) circuitry, which plays a role in suppressing fear-related behavioral states. Dynorphin (Dyn) has been implicated in mediating negative affect and maladaptive behaviors induced by severe threats and is expressed in limbic circuits, including the vmPFC. However, there is a critical knowledge gap in our understanding of how vmPFC Dyn-expressing neurons and Dyn transmission detect threats and regulate expression of defensive behaviors. Here, we demonstrate that Dyn cells are broadly activated by threats and release Dyn locally in the vmPFC to limit passive defensive behaviors. We further demonstrate that vmPFC Dyn-mediated signaling promotes a switch of vmPFC networks to a fear-related state. In conclusion, we reveal a previously unknown role of vmPFC Dyn neurons and Dyn neuropeptidergic transmission in suppressing defensive behaviors in response to threats via state-driven changes in vmPFC networks.