The relationship between panic expectancy, social demand and agoraphobic avoidance was investigated in a group of 48 panic disorder subjects. Subjects were observed surreptitiously while completing a naturalistic behavioral avoidance task (BAT) involving either a high or low social challenge task. Subjects in the high social challenge task avoided more compared to subjects in the low social challenge task. Prediction of panic made before entering the situation and type of social challenge condition (high/low) were the only variables that accounted for significant amounts of unique variance in prediction of BAT score. The results confirm previous findings regarding the relationship between panic expectancy and avoidance and suggest that social interaction and scrutiny is a factor in avoidance.