In the context of psychological treatment, a sudden gain is a large and enduring improvement in symptom severity that occurs between two single therapy sessions. The influence of sudden gains on long‐term outcomes and functional impairment in anxiety disorders is not well understood, and little is known with regard to panic disorder in particular. In addition, previous research on patients with anxiety disorders has produced inconsistent results regarding the relationship between sudden gains and cognitive change. We examined the incidence of sudden gains in a large sample (n = 116) of panic disorder patients undergoing exposure‐focused cognitive‐behavioral group therapy, and compared panic severity, functional impairment, and cognitive change in patients with and without sudden gains at posttreatment and 6‐month follow‐up. Participants who experienced sudden gains displayed lower levels of panic severity and functional impairment at posttreatment and 6‐month follow‐up than those who did not experience sudden gains. However, we observed no difference in cognitive changes between groups, either at posttreatment or at follow‐up. Our results demonstrate that the beneficial effects of sudden gains on therapeutic outcomes not only extend to long‐term and functional outcome measures but are also evident in less cognitive (i.e., exposure‐focused) forms of psychological treatment. Key Practitioner Message Sudden gains are common in panic disorder patients undergoing exposure‐based cognitive‐behavioral group therapy. Sudden gains during exposure‐focused therapy are linked to greater improvement in panic disorder severity and functional impairment. The positive impact of sudden gains on panic disorder severity and functional impairment is maintained in the long term.