BACKGROUND: This 12-week, placebo-controlled study was carried out to compare the relative efficacy of paroxetine, clomipramine, and cognitive therapy in the treatment of DSM-III-R-defined panic disorder with or without agoraphobia. METHOD: After a 3-week single-blind, placebo run-in period, 131 patients were randomly assigned to receive double-blind medication or 12 sessions of cognitive therapy based on the model of Clark. Efficacy assessments included the daily panic attack diary, the Clinical Global Impression scale, the Patient Global Evaluation, the Hamilton Rating Scale for Anxiety, the Marks-Sheehan Phobia Scale, the Montgomery-Asberg Depression Rating Scale, and the Sheehan Disability Scale. RESULTS: Comparisons with placebo revealed significant superiority of paroxetine (20-60 mg/day) and clomipramine (50-150 mg/day) on nearly all outcome measures. On most measures, paroxetine also showed higher efficacy than cognitive therapy. With few exceptions, cognitive therapy did not differ significantly from placebo. The number of subjects becoming panic-free (66%) was higher and the onset of action was faster in the paroxetine-treated group. Treatment with cognitive therapy yielded the highest drop-out rate (26%). CONCLUSION: In this short-term study assessing treatment of panic disorder and agoraphobia, paroxetine and clomipramine were consistently superior to pill placebo, whereas cognitive therapy was superior on only a few measures.