The DSM-III divides anxiety disorders into two broad categories, Phobic Disorders and Anxiety States. Anxiety states characterised by panic attacks have been separated from generalised anxiety disorders. While this classification may not be generally accepted it is of heuristic value. Delineation of panic disorder as a distinct diagnostic entity has led to renewed efforts to identify a biological cause for the sudden severe somatic and psychological symptoms experienced by these patients. A review of evidence for the involvement of the major neurotransmitter systems is presented. Systematic investigations in DSM-III defined groups of patients are only beginning to be reported. It is difficult as yet to draw any definite conclusions, but some tentative evidence for abnormalities of the noradrenergic system and the GABA-benzodiazepine chloride ionophore receptor complex are emerging. The reliable induction of panic attacks by chemical agents provides the promise of a greater understanding of the possible biological mechanisms involved in this anxiety disorder.