Functional plasticity of the brain decreases during ageing causing marked deficits in contextual learning, allocentric navigation and episodic memory. Adult neurogenesis is a prime example of hippocampal plasticity promoting the contextualisation of information and dramatically decreases during ageing. We found that a genetically-driven expansion of neural stem cells by overexpression of the cell cycle regulators Cdk4/cyclinD1 compensated the age-related decline in neurogenesis. This triggered an overall inhibitory effect on the trisynaptic hippocampal circuit resulting in a changed profile of CA1 sharp-wave ripples known to underlie memory consolidation. Most importantly, increased neurogenesis rescued the age-related switch from hippocampal to striatal learning strategies by rescuing allocentric navigation and contextual memory. Our study demonstrates that critical aspects of hippocampal function can be reversed in old age, or compensated throughout life, by exploiting the brain’s endogenous reserve of neural stem cells.