More than 50% of patients who seek psychiatric care for panic disorder have previously received prescriptions for a benzodiazepine (BZ). Research on the treatment of generalized anxiety suggests that a history of BZ exposure might decrease the efficacy and tolerability of treatment with a serotonergic anxiolytic. This study examines the effect of prior BZ treatment on the efficacy and tolerability of sertraline treatment for panic disorder. Data were pooled (N = 705) from four double-blind, placebo-controlled studies of the efficacy of sertraline for the treatment of panic. Two of the studies were 12-week fixed-dose studies with starting doses of 50 mg, whereas 2 were flexible-dose studies of 10-week duration with starting doses of 25 mg. The effect of study treatment on the frequency of panic attacks, Clinical Global Impressions (CGI) Improvement Scale, and tolerability was examined for patients with or without prior BZ treatment. The efficacy of sertraline was not affected by prior treatment with BZs. The mean endpoint reduction in panic attack frequency was identical in patients with or without prior BZ use: 79% vs. 80% (not significant). A history of good versus poor response to prior BZ treatment did not significantly influence CGI responder rates for sertraline-treated patients (67% vs. 61%, respectively). Sertraline CGI responder rates were significantly greater than placebo response, which was 47% for the good-response prior-BZ subgroup (p = 0.007), and 36% for the poor-response BZ subgroup (p = 0.013). Placebo response was lower in patients with any prior BZ use by 10% on an intent-to-treat last-observation-carried-forward analysis (p = 0.106) and by 15% on a completer analysis (p = 0.045). Prior BZ use did not influence either rates of adverse events or discontinuation rates within the first 3 weeks in patients treated with either sertraline or placebo. Sertraline is both well-tolerated and has significant efficacy in patients with panic disorder, including the subset of patients with panic disorder who have previously been treated with BZs.