The neural mechanisms underlying memory regulation during sleep are not yet fully understood. We found that melanin concentrating hormone–producing neurons (MCH neurons) in the hypothalamus actively contribute to forgetting in rapid eye movement (REM) sleep. Hypothalamic MCH neurons densely innervated the dorsal hippocampus. Activation or inhibition of MCH neurons impaired or improved hippocampus-dependent memory, respectively. Activation of MCH nerve terminals in vitro reduced firing of hippocampal pyramidal neurons by increasing inhibitory inputs. Wake- and REM sleep–active MCH neurons were distinct populations that were randomly distributed in the hypothalamus. REM sleep state–dependent inhibition of MCH neurons impaired hippocampus-dependent memory without affecting sleep architecture or quality. REM sleep–active MCH neurons in the hypothalamus are thus involved in active forgetting in the hippocampus.