We used a directed-forgetting paradigm to investigate whether panic disorder patients cognitively avoid threatening information. To determine if hemispheric laterality predicts processing biases in this paradigm, we used dichotic listening methods to ascertain participants' auditory perceptual asymmetry (PA). Panic disorder patients and healthy control participants viewed a series of intermixed threat, positive, and neutral words, each followed by an instruction to either remember the word or forget it. They then performed free recall and recognition tests for all words, irrespective of initial instructions. Directed-forgetting effects occurred equally for all word types: both groups recalled remember-words better than forget-words. Because this task is strongly affected by encoding style, panic patients as a group do not seem to avoid encoding threat cues. However, PA analyses revealed that cognitive avoidance of threat forget-words was significantly associated with greater left hemisphere bias in the control group and nonsignificantly associated with lesser left hemisphere bias in the panic disorder group.