Panic disorder (PD) is unique among the anxiety disorders in that panic symptoms are primarily of a physical nature. Consequently, comorbidity with medical illness is significant. This review examines the association between PD and medical illness. We identify shared pathophysiological and psychological correlates and illustrate how physiological activation in panic sufferers underlies their symptom experience in the context of the fight-or-flight response and beyond a situation-specific response pattern. We then review evidence for bodily symptom perception accuracy in PD. Prevalence of comorbidity for PD and medical illness is presented, with a focus on respiratory and cardiovascular illness, irritable bowel syndrome, and diabetes, followed by an outline for potential pathways of a bidirectional association. We conclude by illustrating commonalities in mediating mechanistic pathways and moderating risk factors across medical illnesses, and we discuss implications for diagnosis and treatment of both types of conditions.