Inclusion Criteria:

• Male and female outpatients, age 18-65.
• Diagnosis of Panic Disorder with or without Agoraphobia by DSM-IV criteria
• MGH Panic Clinical Global Impression of Severity score Score equal to or greater than 4
• Patients with current major depressive disorder will be allowed if the panic disorder is primary (as determined on interview by clinician and patient), and the baseline MADRS score is less than or equal to 20
• Willingness and ability to comply with the requirements of the study protocol.

Exclusion Criteria:

• Pregnant or lactating women or others not using acceptable means of birth control (e.g., IUD, oral contraceptives, barrier devices, condoms and foam, implanted progesterone rods stabilized for at least 3 months).
• Patients with current or history of posttraumatic stress disorder, obsessive compulsive disorder, bipolar disorder, schizophrenia or other psychotic conditions.
• Patients on other psychoactive medication, including MAOIs, and those with the potential need to use an MAOI during the study or within 5 day of discontinuation of study drug will be excluded. Participants must have discontinued MAOI use at least 14 days prior study baseline. Patients must discontinue regular benzodiazepine or other non-MAOI antidepressant therapy at least one week (5 weeks for fluoxetine) prior to baseline. Concomitant beta-blockers are proscribed unless prescribed for a medical indication (e.g., hypertension, at a stable daily dose for > 1 month).
• Patients with a history of alcohol or substance abuse or dependence within the last twelve months, significant alcohol dependence, or a positive toxicology screen consistent with abuse at baseline.
• Patients with significant or unstable neurological or medical disorders or instability for which hospitalization may be likely within the next year. In particular, patients with end-stage renal disease (requiring dialysis) or severe renal impairment, or hepatic insufficiency (defined as twice normal on LFTs as follows: SGPT >110 u/L or SGOT >80 u/L) will be excluded.
• Patients with uncontrolled narrow-angle glaucoma will be excluded.
• Seizure disorders with the exception of a history of febrile seizures if they occurred during childhood, were isolated, and did not recur in adulthood.
• Severe personality disorders likely to interfere with study participation.
• Ongoing psychotherapy directed toward the treatment of the panic disorder or agoraphobia. Prohibited psychotherapy includes cognitive behavioral therapy or psychodynamic therapy that focuses on exploring specific, dynamic causes of the panic or phobic symptoms and provides skills for their management, or any of the active ingredients of these psychotherapies. General supportive individual, couples, or family therapy greater than 2 months duration is acceptable.
• History of hypersensitivity or prior non-response or intolerance of duloxetine.
• Patients who have failed 4 or more medication trials of at least 4 weeks at adequate dose (e.g. paroxetine 20mg or equivalent). Treatment failure is here defined as clinician judgment based on assessment of patient history of prior treatment of minimal or no reduction in panic attacks, anticipatory anxiety or avoidance during a specific, medication trial.
• Patients with significant suicidal ideation (MADRS item 10 score > 3) or who have enacted suicidal behaviors within 6 months prior to intake will be excluded from study participation and referred for appropriate clinical intervention.