Accurate memory formation requires hippocampal spatial representations to balance stability, for later recall, with flexibility, to incorporate new information. The dentate gyrus (DG) is essential to memory formation, but the distinct roles of its excitatory cell types, granule cells (GCs) and mossy cells (MCs), remain unclear. To evaluate how GC and MC activity affect hippocampal output, we recorded from CA1 using two-photon calcium imaging as head-fixed mice navigated familiar and novel virtual environments. DREADD-mediated MC inhibition disrupted initial map stabilization, decreasing spatial stability in novel, but not familiar, environments. In contrast, GC inhibition increased map stability in familiar, but not novel, environments by disrupting drift of spatial maps across distinct experiences (episodes) within an environment. These results reveal how distinct DG cell types support hippocampal memory formation in context-dependent ways; MCs promote stabilization of new spatial maps to support accurate memory recall, while GCs promote flexibility to update existing representations.