Although panic disorder has been associated with impaired quality of life (QOL) and financial dependence, no prior study has examined whether a clinical intervention will improve these outcomes. This study examines the effects of clinically titrated doses of clonazepam versus placebo on QOL and work productivity (WP) in patients with panic disorder. QOL and WP were measured in conjunction with a randomized, double-blind, placebo-controlled trial. The Medical Outcomes Study 36-Item Short Form Health Survey (SF-36) and Work Productivity and Impairment questionnaire were used to assess QOL and WP, respectively. Baseline assessments were obtained before randomizing patients to receive clinically titrated doses of clonazepam or placebo. Follow-up assessments were obtained after 6 weeks of therapy with the test drug or at premature termination from the study. Improvement on the SF-36 Mental Health Component Summary scale was more than twice as great with clonazepam than with placebo (P = 0.03). Clonazepam patients improved (P < 0.05) on all five measures of mental health-related QOL, and both measures of physical health-related QOL, and both measures of WP. Placebo patients improved on three of five measures of mental health-related QOL, but on no other measures. Patients with marked improvements on clinical measures of panic disorder severity, especially avoidance and fear of the main phobia, showed the greatest gains on the SF-36 Mental Health Component Summary scale. Clinically titrated doses of clonazepam significantly improved mental health-related QOL and WP in panic disorder patients. Lesser improvements were obtained with placebo.