An open clinical trial of alprazolam therapy of patients with panic disorder or agoraphobia with panic attacks was undertaken to clarify certain issues not resolved by previous studies. These included the proportion of patients who significantly improve with alprazolam; the relative time courses for improvement in panic attacks, anticipatory anxiety, and phobic avoidance; whether successful alprazolam treatment alters vulnerability to panic with sodium lactate infusion; and what factors predict response to alprazolam in panic patients. Thirty patients meeting DSM-III criteria for panic disorder or agoraphobia with panic attacks completed a 12-week open clinical trial, and 22 were considered responders. In responders, panic attacks showed rapid improvement, whereas improvement of anticipatory anxiety and phobic avoidance was more variable. Successful alprazolam therapy appeared to block lactate vulnerability. High pretreatment Hamilton Anxiety Scale scores were associated with poor treatment response. The data suggest that alprazolam is an effective treatment for panic disorder and agoraphobia with panic attacks, and acts by directly blocking panic attacks.