For individuals to survive and function in society, it is essential that they recognize, interact with, and learn from other conspecifics. Observational fear (OF) is the well-conserved empathic ability of individuals to understand the other's aversive situation. While it is widely known that factors such as prior similar aversive experience and social familiarity with the demonstrator facilitate OF, the neural circuit mechanisms that explicitly regulate experience-dependent OF (Exp OF) were unclear. In this review, we examine the neural circuit mechanisms that regulate OF, with an emphasis on rodent models, and then discuss emerging evidence for the role of fear memory engram cells in the regulation of Exp OF. First, we examine the neural circuit mechanisms that underlie Naive OF, which is when an observer lacks prior experiences relevant to OF. In particular, the anterior cingulate cortex to basolateral amygdala (BLA) neural circuit is essential for Naive OF. Next, we discuss a recent study that developed a behavioral paradigm in mice to examine the neural circuit mechanisms that underlie Exp OF. This study found that fear memory engram cells in the BLA of observers, which form during a prior similar aversive experience with shock, are reactivated by ventral hippocampal neurons in response to shock delivery to the familiar demonstrator to elicit Exp OF. Finally, we discuss the implications of fear memory engram cells in Exp OF and directions of future research that are of both translational and basic interest.