Overgeneralization of fear to harmless situations is a core feature of anxiety disorders resulting from acute stress, yet the mechanisms by which fear becomes generalized are poorly understood. Here we show that generalized fear in mice in response to footshock results from a transmitter switch from glutamate to GABA in serotonergic neurons of the lateral wings of the dorsal raphe. We observe a similar change in transmitter identity in the postmortem brains of PTSD patients. Overriding the transmitter switch in mice using viral tools prevents the acquisition of generalized fear. Corticosterone release and activation of glucocorticoid receptors trigger the switch, and prompt antidepressant treatment blocks the co-transmitter switch and generalized fear. Our results provide new understanding of the plasticity involved in fear generalization.