Regulation of reward signaling in the brain is critical for appropriate judgement of the environment and self. In Drosophila, the protocerebral anterior medial (PAM) cluster dopamine neurons mediate reward signals. Here, we show that localized inhibitory input to the presynaptic terminals of the PAM neurons titrates olfactory reward memory and controls memory specificity. The inhibitory regulation was mediated by metabotropic gamma-aminobutyric acid (GABA) receptors clustered in presynaptic microdomain of the PAM boutons. Cell type-specific silencing the GABA receptors enhanced memory by augmenting internal reward signals. Strikingly, the disruption of GABA signaling reduced memory specificity to the rewarded odor by changing local odor representations in the presynaptic terminals of the PAM neurons. The inhibitory microcircuit of the dopamine neurons is thus crucial for both reward values and memory specificity. Maladaptive presynaptic regulation causes optimistic cognitive bias.