Panic disorder (PD) in children and adolescents is a disabling and chronic condition, which is accompanied by psychosocial and academic difficulties, both during adolescence and into adulthood. In this article, the prevalence, clinical characteristics, risk factors, comorbid states, differential diagnosis, and treatment of PD are reviewed. Although PD was thought to be rare in children and adolescents, the prevalence of PD in community samples ranges between 0.5% and 5.0, and in pediatric psychiatric clinics from 0.2% to 10%. Panic attacks are reported to be equally prevalent in males and females. Clinical studies have shown that the majority of the PD pediatric patients receiving consultation in clinics are older adolescents, Caucasian, female, and middle class. Up to 90% of children and adolescents with PD have other anxiety disorders (generalized anxiety disorder/overanxious disorder, separation anxiety disorder, social phobia or agoraphobia), or mood disorders (major depressive disorder or bipolar disorder). PD patients can be misdiagnosed or having neurologic, cardiovascular, pulmonary, or gastrointestinal illness. Psycho-education and psychosocial treatments are recommended, and it appears that selective serotonin reuptake inhibitors (SSRIs) are a safe and promising treatment for children and adolescents with PD. The clinical characteristics, long-term course, and treatment of PD in children and adolescents needs to be further assessed by well-designed studies.