Heightened aggression is characteristic of multiple neuropsychiatric disorders and can have various negative effects on patients, their families and the public. Recent studies in humans and animals have implicated brain reward circuits in aggression and suggest that, in subsets of aggressive individuals, domination of subordinate social targets is reinforcing. In this study, we showed that, in male mice, orexin neurons in the lateral hypothalamus activated a small population of glutamic acid decarboxylase 2 (GAD2)-expressing neurons in the lateral habenula (LHb) via orexin receptor 2 (OxR2) and that activation of these GAD2 neurons promoted male–male aggression and conditioned place preference for aggression-paired contexts. Moreover, LHb GAD2 neurons were inhibitory within the LHb and dampened the activity of the LHb as a whole. These results suggest that the orexin system is important for the regulation of inter-male aggressive behavior and provide the first functional evidence of a local inhibitory circuit within the LHb.