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OBJECTIVE: Respiratory abnormalities may play a central role in the pathophysiology of panic disorder. The current study was undertaken to examine the respiratory response in the largest series of subjects to date during three respiratory challenges that used improved methodology. METHOD: Fifty-nine patients with DSM-III-R panic disorder and 39 normal volunteers were challenged with 5% and 7% CO2 inhalation and room air hyperventilation separated by room air breathing with continuous spirometry. RESULTS: Patients with panic disorder were more sensitive to the anxiogenic effects of CO2 than were normal subjects, and CO2 was a more potent stimulus to panic than hyperventilation. Patients increased their respiratory rate more quickly during CO2 inhalation than did comparison subjects, and this increase preceded the panic attacks. Patients who panicked in response to 5% CO2 demonstrated continued rise in end-tidal CO2, while the end-tidal CO2 of the comparison groups stabilized. Low end-tidal CO2 and high variance in minute ventilation at baseline predicted panic attacks during CO2 inhalation. Following CO2 or hyperventilation challenges, respiratory rate dropped sharply, while tidal volume remained elevated longer in patients than in comparison subjects. CONCLUSIONS: The findings confirm the greater behavioral and physiological sensitivity of patients with panic disorder to CO2 inhalation and identify a series of respiratory abnormalities. Panic attacks in panic disorder may be explained by inefficient compensatory mechanisms, primarily of respiratory rate. (Am J Psychiatry 1997; 154:1557–1565)