Education for the patient and significant others covering: (i) the nature and course of panic disorder and agoraphobia; (ii) an explanation of the psychopathology of anxiety, panic and agoraphobia; (iii) rationale for the treatment, likelihood of a positive response, and expected time frame. Cognitive behaviour therapy (CBT) is more effective and more cost-effective than medication. Tricyclic antidepressants (TCAs) and serotonin selective reuptake inhibitors are equal in efficacy and both are to be preferred to benzodiazepines. Treatment choice depends on the skill of the clinician and the patient's circumstances. Drug treatment should be complemented by behaviour therapy. If the response to an adequate trial of a first-line treatment is poor, another evidence-based treatment should be used. A second opinion can be useful. The presence of severe agoraphobia is a negative prognostic indicator, whereas comorbid depression, if properly treated, has no consistent effect on outcome.