While obesity induces cardio-metabolic disorders and cognitive deficits, the underlying neural mechanisms remain unexplored. In mice, exposure to an obesogenic high-fat and sugar diet (HFD) resulted in social recognition memory deficits, a process that is dependent upon hippocampal area CA2 and oxytocin signaling. HFD-fed mice had stronger inputs onto CA2 pyramidal neurons that led to increased action potential firing, without altering intrinsic properties or inhibitory transmission. Chemogenetic CA2 inhibition rescued HFD-induced social memory deficits, confirming the role of CA2 hyperexcitability in these effects. In CA2, oxytocin receptor activation resulted in membrane depolarization, spontaneous action-potential firing and permitted endocannabinoid-mediated plasticity in control diet-fed mice, but not HFD-fed littermates. In a concentration-dependent manner, oxytocin restored potentiation of excitatory responses and allowed for endocannabinoid plasticity at CA2 inhibitory synapses as well as social memory deficits in HFD-fed mice. By investigating the influence of diet on hippocampal area CA2, this study uncovers novel mechanisms linking neuromodulation and plasticity in social memory encoding.