Abnormal cellular and circuit excitability is believed to drive many core phenotypes in fragile X syndrome (FXS). The dentate gyrus is a brain area performing critical computations essential for learning and memory. However, little is known about dentate circuit defects and their mechanisms in FXS. Understanding dentate circuit dysfunction in FXS has been complicated by the presence of two types of excitatory neurons, the granule cells and mossy cells. Here we report that loss of FMRP markedly decreased excitability of dentate mossy cells, a change opposite to all other known excitability defects in excitatory neurons in FXS. This mossy cell hypo-excitability is caused by increased Kv7 function in knockout (KO) mice. By reducing the excitatory drive onto local hilar interneurons, hypo-excitability of mossy cells results in increased excitation/inhibition ratio in granule cells and thus paradoxically leads to excessive dentate output. Circuit-wide inhibition of Kv7 channels in KO mice increases inhibitory drive onto granule cells and normalizes the dentate output in response to physiologically relevant theta-gamma coupling stimulation. Our study suggests that circuit-based interventions may provide a promising strategy in this disorder to bypass irreconcilable excitability defects in different cell types and restore their pathophysiological consequences at the circuit level.