Objective: Fear reactivity during exposure is a commonly used indicator of learning and overall therapy outcome. The objective of this study was to assess the predictive value of fear reactivity during exposure using multimodal indicators and an advanced analytical design. We also investigated the degree to which treatment condition (cognitive training vs. respiratory skill training) moderated fear reactivity and therapeutic outcome. Method: Thirty-four patients with panic disorder and agoraphobia completed a total of 123 in-vivo exposure sessions, comprising 3 weekly sessions and a 4th session 2 months following therapy completion. Sessions varied in length and phobic stimuli. Cardiorespiratory physiology (heart rate, carbon dioxide partial pressure [PCO[subscript 2]], respiration rate) and experiential symptoms (panic symptoms and anxiety) were assessed repeatedly throughout exposure sessions, in addition to weekly assessments of panic cognitions, avoidance, and functioning. Results: Panic symptomatology decreased substantially in both treatment conditions during therapy and follow-up. Significant cardiorespiratory and experiential reactivity was observed during all exposures, characterized by activation followed by reduction. Greater within-session activation of anxiety and panic symptoms was inversely related to improvement in panic symptoms severity, but neither physiological activation nor within- or between-session reduction of either physiological or experiential variables was predictive of outcome. No moderating effects of treatment condition were found. Conclusions: Fear activation and reduction during exposure are weak predictors of corrective learning and fear extinction. Clinical implications for exposure therapy and directions for future research are discussed. (Contains 1 figure, 3 tables, and 1 footnote.)