To investigate the psychophysiological features of panic disorder (PD), we recorded auditory event-related potentials (ERPs) in 12 patients with PD meeting the DSM-IV criteria and in 12 age-matched normal controls. The ERPs were recorded during a standard two-tone discrimination task (oddball task). The probabilities of the rare target (1200 Hz) and frequent non-target tones (1000 Hz) were 15 and 85%, respectively. The subjects were required to press a button in response to the rare target tones. Scalp electroencephalograms were recorded from Fz, Cz, Pz, C3, and C4. The State-Trait Anxiety Inventory and Manifest Anxiety Scale scores were assessed for clinical evaluation. Analysis of variance revealed that the N1 and N2 amplitudes for target tones and the N1 amplitude for non-target tones were significantly larger in the PD patients than those in the controls. The two groups did not differ significantly in P3 latency and amplitude. The larger N1 and N2 amplitudes in the PD patients are suggestive of alteration of early information processing in PD.