Reversal of synaptic plasticity has been the prevalent theory for extinction of animal conditioning. Phenomena like faster reacquisition after extinction are explained via residual synaptic plasticity in the relevant neural circuits. However, this account cannot explain many recent behavioral findings. This includes phenomena like savings in extinction, reinstatement, spontaneous recovery and renewal. These phenomena point to the possibility that extinction is not a mere reversal of the associations formed during acquisition. It instead involves the superimposition of some separate decremental process that works to inhibit the previously learned responses. We have explored this dual-pathway account using a neurocomputational model of conditioning. In our model, associations related to acquisition and extinction are maintained side by side as a result of the interaction between general neural learning processes and the presence of lateral inhibition between neurons. The model captures most of the relevant behavioral phenomena that prompted the hypothesis of separate acquisition and extinction pathways. It also shows how seemingly complex behavior can emerge out of relatively simple underlying neural mechanisms.