This article provides an empirical review of the elements and efficacy of both pharmacologic and psychosocial treatments for panic disorder. Both monotherapies and combination treatment strategies are considered. The available evidence suggests that both cognitive behavioral therapy (CBT) and pharmacotherapy (prominently, selective serotonin reuptake inhibitors or serotonin-norepinephrine reuptake inhibitors) are effective first-line agents and that CBT offers particular cost efficacy relative to both pharmacotherapy alone and combined pharmacotherapy and CBT. Predictors of non-response and mechanisms of action are considered, as are novel treatment strategies, including the use of memory enhancers to improve CBT outcome.