To investigate the impact of situational panic attacks in social phobia, this study examined symptoms of social anxiety and avoidance, dysfunction, and associated psychopathology among individuals with social phobia who experience situational panic attacks, individuals meeting criteria for both social phobia and panic disorder, and individuals with social phobia but no report of panic attacks. One hundred thirty-three persons with a principal diagnosis of social phobia were evaluated. Fifty-seven individuals, who experienced panic attacks exclusively in the context of feared social situations, were compared to 15 individuals with social phobia who also experienced spontaneous panic attacks and met criteria for panic disorder and 61 social phobics who did not experience panic attacks. Compared to social phobics without panic, social phobics with situational panic attacks demonstrated greater fear and avoidance of social situations and higher ratings of somatic anxiety, were more distressed and impaired by their social phobias, and reported higher levels of anxiety sensitivity and hopelessness than social phobics without panic. Additionally, social phobia patients with situational panic but without panic disorder reported greater hopelessness than participants with comorbid panic disorder. In regression analyses, situational panic attacks accounted for significant unique variance beyond that contributed by the presence of comorbid panic disorder. Situational panic attacks are common in social phobia. They are associated with significant and unique disturbances compared either to the absence of panic attacks or to panic attacks in the context of comorbid panic disorder and deserve attention in both research and treatment of social phobia.