The present study investigated the relationship between functional status and panic disorder in patients with pulmonary disease. Functional status is a broad term used to describe the impact of pulmonary disease on activities of daily life. Researchers have shown that functional status is influenced not only by physiological variables but also by psychological factors. Given the increased prevalence rates of panic disorder and other psychiatric disorders reported in pulmonary patients, the functional status of pulmonary patients may become increasingly compromised by the presence of a psychological disorder such as panic disorder. Thus, we hypothesized that panic symptomatology played an important role in the functional status of pulmonary patients beyond the physiological effects of pulmonary disease. In this sample of pulmonary patients(N = 28), relative to non-panic-disordered participants, panic-disordered patients did not report significantly greater levels of dyspnea(p > .05). However, these groups did show significant differences on measures of functional status(p < .017). The results also indicated that anxiety and depression continued to correlate positively with functional status even after controlling for the effects of dyspnea. These findings suggest that although patients with panic symptoms report no differences in physiological functioning relative to patients without panic symptoms, individuals with panic experience greater disruption in their lives due to psychological factors than do individuals without panic symptoms. These findings highlight the need for the consideration of mental health concerns in patients with chronic pulmonary disease.