Dopamine modulates medial prefrontal cortex (mPFC) activity to mediate diverse behavioural functions(1,2); however, the precise circuit computations remain unknown. One potentially unifying model by which dopamine may underlie a diversity of functions is by modulating the signal-to-noise ratio in subpopulations of mPFC neurons(3-6), where neural activity conveying sensory information (signal) is amplified relative to spontaneous firing (noise). Here we demonstrate that dopamine increases the signal-to-noise ratio of responses to aversive stimuli in mPFC neurons projecting to the dorsal periaqueductal grey (dPAG). Using an electrochemical approach, we reveal the precise time course of pinch-evoked dopamine release in the mPFC, and show that mPFC dopamine biases behavioural responses to aversive stimuli. Activation of mPFC-dPAG neurons is sufficient to drive place avoidance and defensive behaviours. mPFC-dPAG neurons display robust shock-induced excitations, as visualized by single-cell, projection-defined microendoscopic calcium imaging. Finally, photostimulation of dopamine terminals in the mPFC reveals an increase in the signal-to-noise ratio in mPFC-dPAG responses to aversive stimuli. Together, these data highlight how dopamine in the mPFC can selectively route sensory information to specific downstream circuits, representing a potential circuit mechanism for valence processing.