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This paradoxical relationship has made it challenging to tease apart sources of variability that degrade performance from those that improve it. We tackled this question in a context-dependent timing task requiring humans and monkeys to flexibly produce different time intervals with different effectors. We identified two opposing factors contributing to timing variability: slow memory fluctuation that degrades performance and reward-dependent exploratory behavior that improves performance. Signatures of these opposing factors were evident across populations of neurons in the dorsomedial frontal cortex (DMFC), DMFC-projecting neurons in the ventrolateral thalamus, and putative target of DMFC in the caudate. However, only in the thalamus were the performance-optimizing regulation of variability aligned to the slow performance-degrading memory fluctuations. 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