Anxiety and depression are often interlinked as demonstrated by clinical, epidemiological, psychopharmacological and even genetic studies. However, robust biochemical and electrophysiological evidence for linkage or separation of mood and anxiety disorders is scarce. Brain stem auditory evoked potentials (BASEP) can easily and non-invasivly be measured in psychiatric patients and reflect neurophysiological processes in the brain stem. The aim of the present study was to evaluate BASEP in drug-free patients suffering from panic disorder or major depression and to compare these to healthy controls. Patients (n = 26; panic = 16, depression = 10) were diagnosed according to Diagnostic and Statistical Manual (DSM)-III-R criteria assessed by the Hamilton Anxiety and Hamilton Depression Scales, and all underwent 3 weeks of medications washout. All subjects (n = 36) completed the study. N3 latency was decreased in the patient group (P < 0.05), N3-5 interval was lengthened (P < 0.05), the N3 latency correlated with anxiety scores and depression scores correlated with the N3 and N5 latency periods. In conclusion, our small sample demonstrated shared electrophysiological variables in panic disorder and depression, further supporting the concept of spectrum disorder.