A universal principle of sensory perception is the progressive transformation of sensory information from broad non-specific signals to stimulus-selective signals that form the basis of perception. To perceive color, our brains must transform the wavelengths of light reflected off objects into the derived quantities of brightness, saturation and hue. Neurons responding selectively to hue have been reported in primate cortex, but it is unknown how their narrow tuning in color space is produced by upstream circuit mechanisms. To enable circuit level analysis of color perception, we here report the discovery of neurons in the Drosophila optic lobe with hue selective properties. Using the connectivity graph of the fly brain, we construct a connectomics-constrained circuit model that accounts for this hue selectivity. Unexpectedly, our model predicts that recurrent connections in the circuit are critical for hue selectivity. Experiments using genetic manipulations to perturb recurrence in adult flies confirms this prediction. Our findings reveal the circuit basis for hue selectivity in color vision.