Contextual information can modulate the conditioned response to a threat signal (conditioned stimulus, CS+): fear responses are either potentiated or attenuated depending on whether the context is threatening or safe. In this study, we investigated the influence of context on conditioned fear as well as on generalization of conditioned fear. Thirty-two participants underwent a cue-in-context learning protocol in virtual reality (VR). On Day 1 (acquisition), participants received a mild painful electric shock (unconditioned stimulus, US) in one virtual room (fear context, CTX+) at the offset of one colored light (CS+), but never at the offset of another colored light (CS-). In a second room (safety context, CTX-), the two lights were also presented, but not the US. Successful cue conditioning was indicated by aversive ratings and startle potentiation but not skin conductance responses (SCR) to CS+ versus CS- in CTX+ and not in CTX-. On Day 2 (generalization), participants re-visited both fear and safety contexts plus a generalization context (G-CTX), which was an equal mix of CTX+ and CTX-. The two CSs were shown again in all three contexts. Generalization of conditioned fear was revealed in affective ratings (CS+ was rated more aversive than CS- in G-CTX), but not in physiological measures (equal startle potentiation to CS+ versus CS- in all contexts). In sum, contextual information modulates the responses to a threat signal such that a safety context can inhibit conditioned fear. Interestingly, generalization processes also depend on contextual information.