There is now agreement about the clinical features of panic disorder and agoraphobia but less agreement about treatment because of controversy over whether the disorder is primarily biological or psychological. The authors were requested to produce an impartial review for continuing education and peer review. We chose to do this by using a quantitative review procedure, by providing a bibliography of studies, and by a literature review. We found that symptoms of panic and phobia did not change significantly while on wait-list control or while receiving placebo. The evidence for the efficacy of the low-potency benzodiazepines or of monoamine oxidase inhibitors was limited. It was also clear that only limited improvement can be expected from behavior therapies that do not involve exposure to the symptoms of panic or to the feared situation. Symptoms of panic, as well as the frequency of spontaneous panic, were shown to be substantially improved following imipramine, high-potency benzodiazepines such as alprazolam, exposure in vivo (especially if a cognitive anxiety management procedure was used), and the combination of imipramine and exposure in vivo. The effects on panic produced by the exposure therapies (with or without imipramine) were maintained over long follow-up periods. Imipramine, alprazolam, exposure therapy, and imipramine plus exposure each produced significant improvements in phobias. In the short term and in the long term, the larger improvements in phobias were associated with exposure therapy, particularly if used in combination with imipramine. We conclude that it would be unwise to theorize about the etiology of this disorder on the basis of response to a specific treatment because, both at the meta-analytic level and from the review of individual studies, it is clear that both drug and nondrug therapies can produce substantial and long-lasting changes in panic and in phobias.