Anxiety disorders commonly co-occur with alcohol use disorders and reliably mark a poor response to substance abuse treatment. However, treating a co-occurring anxiety disorder does not reliably improve substance abuse treatment outcomes. Failure to account for individual differences in the functional dynamic between anxiety symptoms and drinking behavior might impede the progress and clarity of this research program. For example, while both theory and research point to the moderating role of tension-reduction alcohol outcome expectancies (TR-AOEs) in the association between anxiety symptoms and alcohol use, relevant treatment studies have not typically modeled TR-AOE effects. We examined the impact of a hybrid cognitive-behavioral therapy (H-CBT) treatment for panic disorder (independent variable) on response to a community-based alcohol dependence treatment program (dependent variable) in patients with higher vs. lower TR-AOEs (moderator). The H-CBT treatment was generally effective in relieving participants' panic symptoms relative to controls. However, TR-AOEs interacted with study cohort (H-CBT vs. control) in predicting response to substance abuse treatment. As expected, the H-CBT was most effective in improving alcohol use outcomes among those with the highest TR-AOEs. The study's primary methodological limitations are related to the quasi-experimental design employed.