Epidemiological studies suggest that about 3.5% of the adult United States population meet criteria for panic disorder, and that an additional 2-5% suffer from agoraphobia with or without panic. Both biological and behavioral models have been proposed to elucidate the nature of this disorder. The authors review research findings regarding these models, as well as pharmacological and cognitive-behavioral treatment approaches. The complexity of factors contributing to the disorder suggests the need for an integrated treatment approach involving considerations of combination drug therapy and psychosocial interventions.