This mentored patient-oriented treatment development award is designed to assist Barbara Milrod, M.D. to become an independent physician investigator. It will also further the development of the psychotherapy research program at Cornell by expanding it into the area of panic disorder. The award will free Dr. Milrod from much of her present clinical responsibility and enable her to obtain the training and experience necessary to become a well-rounded investigator. The training plan is built on specific educational experiences dedicated to achieve specific educational aims, with close tutoring by expert clinical research faculty. The specific aims of the research plan are to: 1) Conduct a randomized controlled trial of PFPP in comparison with relaxation treatment (ART) for patients with panic disorder. 2) Building upon previous research, to test a set of instruments that can reliably distinguish between the already-manualized Panic-Focused Psychodynamic Psychotherapy (PFPP) and applied relaxation training (ART). The plan develops a method of testing the efficacy of an accessible and commonly practiced treatment, psychodynamic psychotherapy, for a specific DSM Axis I disorder, panic disorder. Psychodynamic psychotherapy is a widely-practiced, understudied treatment that deserves careful assessment in clinical populations. Panic disorder is a significant public health problem, from which some treatment responders may relapse after receiving therapies that have been researched to date. Academic and research activities will take place throughout the award period. Upon completion of the award, Dr. Millrod will serve as principle investigator in psychotherapy research studies, and as mentor to residents, child and adolescent psychiatry fellows, medical students and colleagues.