Eighty-nine subjects with panic disorder, who had been naturalistically treated, and 46 nonanxious controls were followed up after 3 years. Although they remained symptomatic, most subjects with panic disorder reported relatively little distress or social maladjustment. The course of panic disorder was characterized by fluctuating anxiety and depressive symptoms. Panic subtypes (uncomplicated, limited phobic avoidance, and extensive phobic avoidance) and Axis I and II comorbidity (major depression and personality disorders) were highly predictive of symptoms and social adjustment after 3 years. Abnormal personality was, in fact, the strongest predictor of social maladjustment in both subjects with panic disorder and controls. The results showed that while panic disorder has a favorable outcome, the illness is a chronic one that may require continuing treatment. They also show that subtypes and comorbid disturbances are important predictors of outcome.