Mitochondria are cellular ATP generators. They are dynamic structures undergoing fission and fusion. While much is known about the mitochondrial fission machinery, the mechanism of initiating fission and the significance of fission to neurophysiology are largely unclear. Gamma oscillations are synchronized neural activities that impose a great energy challenge to synapses. The cellular mechanism of fueling gamma oscillations has yet to be defined. Here, we show that dysbindin-1, a protein decreased in the brain of individuals with schizophrenia, is required for neural activity-induced fission by promoting Drp1 oligomerization. This process is engaged by gamma-frequency activities and in turn, supports gamma oscillations. Gamma oscillations and novel object recognition are impaired in dysbindin-1 null mice. These defects can be ameliorated by increasing mitochondrial fission. These findings identify a molecular mechanism for activity-induced mitochondrial fission, a role of mitochondrial fission in gamma oscillations, and mitochondrial fission as a potential target for improving cognitive functions.