Dizziness is a common and costly condition that causes significant distress and impairment yet often confounds appropriate diagnosis and treatment. Among patients presenting for evaluation and treatment of dizziness, rates of panic disorder are elevated to 5 to 15 times the general population rates. In addition, the limited studies to date of dizziness in patients with panic disorder suggest that panic patients frequently experience significant dizziness and often demonstrate evidence of vestibular dysfunction. In this paper we review studies investigating the relationship between panic disorder and vestibular dysfunction. Currently, there are three main explanatory models for the association between panic disorder and vestibular dysfunction: the psychosomatic model, the somatopsychic model, and the network alarm theory. Systematic investigations of the treatment of patients with vestibular symptoms and panic disorder are lacking, though prevalence, associated costs, and disability suggest that they are needed. Serotonin selective reuptake inhibitors are good candidates for future treatment studies.