One hundred seventy-five consecutive patients referred for continuous ambulatory electrocardiographic (Holter) monitoring because of palpitations were studied. The investigators assessed cardiac symptoms, psychiatric diagnosis, life stress, beliefs about heart disease, somatization, and bodily absorption and amplification. Cardiac awareness, cardiac symptoms and cardiac activity were assessed during Holter monitoring and exercise tolerance testing (ETT). The referring physicians completed instruments rating their diagnostic impressions and clinical interventions. The patients' clinical course was then followed over the ensuing 12 months with telephone interviews and in-person assessments. These data permitted description and distinguished three subgroups of palpitation patients: those with panic disorder, in whom the symptom resulted from sympathetic nervous system arousal; those who were somatizing after a life event caused them to suspect that they had heart disease, in whom the palpitation resulted from a cognitive misattribution of benign bodily sensation; and those with clinically significant arrhythmias, whose symptoms resulted from a major cardiac irregularity. These findings were used to develop a clinical algorithm to aid in the differential diagnosis of palpitations and in identifying the patients most appropriate for Holter monitoring.