Panic disorder, comprising also agoraphobia for the purpose of this review, has a prevalence of 1.2-8.4 per cent, affecting females twice as frequently as males, and has a mean age of onset of 25. It is one of the more familial diseases in Psychiatry in that 2/3 of cases have relatives affected with the same condition, and the risk to first degree relatives is approximately 3-4 times the rate of the general population. Although some family studies have suggested an overlap in the transmission of panic disorders and depression, and a common diathesis hypothesis has been proposed, depression is more common in the families of depressives, as in panic disorder in the families of probands with panic disorder. Twin studies of anxiety disorders, although limited in number, report a 30-40 per cent concordance among MZ twins, against 0-4 per cent among DZ twins, which supports a genetic predisposition. The mode of transmission is uncertain. Studies which have used the 'ancestral pairs' method (which examines the incidence of the condition in maternal versus paternal forebears, on the assumption that single locus transmission is favored by unilateral clustering, and polygenic theories are favored by a more even spread) have favored single locus transmission, although such unilateral clustering can still be accommodated within a multifactorial-polygenic hypothesis. Potential biological markers for the condition are reviewed. The observation that lactate infusion can precipitate panic attacks in predisposed individuals is well established. The association with mitral valve prolapse suggests that perhaps 38 per cent of patients presenting with symptoms of panic disorders have mitral valve prolapse on echocardiography. The possibility of an endogenous anxiety-producing agent that binds to the benzodiazepine receptor is discussed.