The molecular mechanism for how RISC and microRNAs selectively and reversibly regulate mRNA translation in response to receptor signaling is unknown but could provide a means for temporal and spatial control of translation. Here we show that miR-125a targeting PSD-95 mRNA allows reversible inhibition of translation and regulation by gp1 mGluR signaling. Inhibition of miR-125a increased PSD-95 levels in dendrites and altered dendritic spine morphology. Bidirectional control of PSD-95 expression depends on miR-125a and FMRP phosphorylation status. miR-125a levels at synapses and its association with AGO2 are reduced in Fmr1 KO. FMRP phosphorylation promotes the formation of an AGO2-miR-125a inhibitory complex on PSD-95 mRNA, whereas mGluR signaling of translation requires FMRP dephosphorylation and release of AGO2 from the mRNA. These findings reveal a mechanism whereby FMRP phosphorylation provides a reversible switch for AGO2 and microRNA to selectively regulate mRNA translation at synapses in response to receptor activation.