The aim of the present study is to a) determine the comparative efficacy of the brief capnometry-assisted respiratory therapy (CART) and standard cognitive behavioural therapy (CBT), and b) to determine moderators and mediators.

With the data collected from the study, the investigators will test the following hypotheses: (a) CART will be as effective in treating PD/A as CBT, albeit in shorter time, b) patients with greater respiratory dysregulations, especially hyperventilation, at pretreatment will benefit more from CART, whereas patients with greater cognitive dysregulation will benefit more from CBT. CART, but not CBT, will result in reversal of hyperventilation.

Inclusion Criteria:

1. A current DSM-IV (Diagnostic and Statistical Manual IV) diagnosis of panic disorder with or without agoraphobia that is designated by the patient as the most important source of current distress
2. Patients must be willing to engage in exposure to fearful situations and sensations.

Exclusion Criteria:

Diagnostic Exclusion Criteria:

1) A history of bipolar disorder, psychosis or delusional disorders (as evaluated by the SCID-IV-L (Structured Clinical Interview for the DSM IV) screening questions), substance abuse or dependence or alcohol abuse or dependence (other than nicotine in the last 3 months)

Medical exclusion factors:

1. Patients with severe unstable medical illness, clinically significant laboratory findings, or serious medical illness for which hospitalization may be likely within the next three months
2. Patients with a history of seizures, angina, myocardial infarction, congestive heart failure, clinically significant arrhythmias, transient ischemic attacks, cerebrovascular accidents, diabetes mellitus, significant asthma, emphysema, or chronic obstructive pulmonary disease