How does the brain maintain fear within an adaptive range? We found that the insular cortex acts as a state-dependent regulator of fear that is necessary to establish an equilibrium between the extinction and maintenance of fear memories in mice. Whereas insular cortex responsiveness to fear-evoking cues increased with their certainty to predict harm, this activity was attenuated through negative bodily feedback that arose from heart rate decelerations during freezing. Perturbation of body-brain communication by vagus nerve stimulation disrupted the balance between fear extinction and maintenance similar to insular cortex inhibition. Our data reveal that the insular cortex integrates predictive sensory and interoceptive signals to provide graded and bidirectional teaching signals that gate fear extinction and illustrate how bodily feedback signals are used to maintain fear within a functional equilibrium.