Prepulse inhibition (PPI) is an operational measure of sensorimotor gating that is reduced in several neuropsychiatric disorders that are characterized by deficits in inhibition or gating of intrusive or irrelevant stimuli. Clinically, panic disorder (PD) patients have been described as having difficulties in inhibition of responding to sensory and cognitive events. Because such difficulties may be due to failures in early stages of information processing, we examined PPI in patients with PD. Acoustic startle reactivity, habituation, and PPI (30-, 60-, 120-, 240-, and 2,000-ms interstimulus intervals) were assessed in patients with panic disorder (m/f = 10, 10) and age- and gender-matched healthy controls (m/f = 11, 10). PD patients were assessed with structured clinical interview for DSM-IV criteria with benzodiazepine treatment as an exclusion criterion. Panic disorder patients exhibited normal startle reactivity, reduced habituation, and significantly reduced PPI in the 30-, 60-, and 240-ms prepulse conditions. Within the PD group, the patients with high trait and state anxiety exhibited less PPI than patients with low trait and state anxiety. Furthermore, in PD patients, decreased PPI correlated significantly with high trait but not state anxiety. These data indicate that early stages of sensory information processing are abnormal in patients with PD. These observed deficits in PPI could reflect a more generalized difficulty in suppressing or gating information in panic disorder. The correlation between high trait anxiety and deficient PPI supports the hypothesis that sensorimotor gating abnormalities are an enduring feature of subjects with PD.