Massive activation of dopamine neurons is critical for natural reward and drug abuse. In contrast, the significance of their spontaneous activity remains elusive. In Drosophila melanogaster, depolarization of the protocerebral anterior medial (PAM) cluster dopamine neurons en masse signals reward to the mushroom body (MB) and drives appetitive memory. Focusing on the functional heterogeneity of PAM cluster neurons, we identified that a single class of PAM neurons, PAM-γ3, mediates sugar reward by suppressing their own activity. PAM-γ3 is selectively required for appetitive olfactory learning, while activation of these neurons in turn induces aversive memory. Ongoing activity of PAM-γ3 gets suppressed upon sugar ingestion. Strikingly, transient inactivation of basal PAM-γ3 activity can substitute for reward and induces appetitive memory. Furthermore, we identified the satiety-signaling neuropeptide Allatostatin A (AstA) as a key mediator that conveys inhibitory input onto PAM-γ3. Our results suggest the significance of basal dopamine release in reward signaling and reveal a circuit mechanism for negative regulation.