This study compared Panic Online (PO), an internet-based CBT intervention, to best-practice face-to-face CBT for people with panic disorder with or without agoraphobia. Eighty-six people with a primary diagnosis of panic disorder were recruited from Victoria, Australia. Participants were randomly assigned to either PO (n=46) or best practice face-to-face CBT (n=40). Effects of the internet-based CBT program were found to be comparable to those of face-to-face CBT. Both interventions produced significant reductions in panic disorder and agoraphobia clinician severity ratings, self reported panic disorder severity and panic attack frequency, measures of depression, anxiety, stress and panic related cognitions, and displayed improvements in quality of life. Participants rated both treatment conditions as equally credible and satisfying. Participants in the face-to-face CBT treatment group cited higher enjoyment with communicating with their therapist. Consistent with this, therapists' ratings for compliance to treatment and understanding of the CBT material was higher in the face-to-face CBT treatment group. PO required significantly less therapist time than the face-to-face CBT condition.