The ten-eleven translocation (Tet) family of methylcytosine dioxygenases catalyze oxidation of 5-methylcytosine (5mC) to 5-hydroxymethylcytosine (5hmC) and promote DNA demethylation. Despite the abundance of 5hmC and Tet proteins in the brain, little is known about the functions of the neuronal Tet enzymes. Here, we analyzed Tet1 knockout mice (Tet1KO) and found downregulation of multiple neuronal activity-regulated genes, including Npas4, c-Fos, and Arc. Furthermore, Tet1KO animals exhibited abnormal hippocampal long-term depression and impaired memory extinction. Analysis of the key regulatory gene, Npas4, indicated that its promoter region, containing multiple CpG dinucleotides, is hypermethylated in both naive Tet1KO mice and after extinction training. Such hypermethylation may account for the diminished expression of Npas4 itself and its downstream targets, impairing transcriptional programs underlying cognitive processes. In summary, we show that neuronal Tet1 regulates normal DNA methylation levels, expression of activity-regulated genes, synaptic plasticity, and memory extinction.