Panic disorder is a commonly encountered condition in general medical practice and in various medical settings. It is important for all medical practitioners to be able to recognize this disorder, provide patients with basic information and medical advice, and depending on the specific circumstances, to refer patients for appropriate treatment by primary care physicians, psychiatrists and/or clinical psychologists. This article reviews the developments in the treatment of panic disorder, focusing on the major treatment modalities of pharmacotherapy and cognitive–behavior therapy, as well as their combinations. In addition to providing information on current treatments for panic disorder and the main underlying treatment issues, the article identifies areas where improvements need to be made and areas where much research has been conducted in recent years. These include simplified modes of delivery of cognitive–behavior therapy, optimal ways of combining medications with cognitive–behavior therapy, and minimizing the risk of recurrence after the cessation of treatment.