Panic of Girls was recorded between October–December 2009 in Woodstock, New York, and May 2010 in Hoboken, New Jersey, being the second album in the band's history to be recorded outside of Manhattan, after 1980's Autoamerican, which was recorded in Los Angeles. This is the first Blondie album which doesn't feature original keyboardist Jimmy Destri. According to Clem Burke, the band's drummer, Destri had planned to contribute to the writing and recording of the album, but was ultimately not a part of it. Paul Carbonara, who was with Blondie since 1998, departed the band partway through the recording sessions, and was replaced by Tommy Kessler. Both of them, along with Leigh Foxx and Matt Katz-Bohen, are credited as full band members on the released album.
Clem Burke also said that about 35 songs were recorded during the sessions for the album, with only 14 that were planned to make the album. All band members have contributed to the release, with vocalist Debbie Harry writing most of the lyrics.
The album name came from the lyrics of a track recorded for the album: "End of the World", which ultimately did not appear on its final track list though was included as a bonus track on the European deluxe edition. The album was initially to be titled Panic Of Truth. The album contains one song in French ("Le Bleu") and two in Spanish ("Wipe Off My Sweat" and "Mirame", though the later appears only on Collectors Pack version of the album).
Two tracks from the album, "What I Heard" and "Girlie Girlie", were included on a special release of the band's 1978 album Parallel Lines that came free with the British newspaper The Mail on Sunday on December 5, 2010. Another song, "Mother", was made available as a free download from the band's website. A second, final version of the song would later be announced as the lead single, available for purchase on May 23, 2011.
The album was originally due for release in 2010, but difficulties with record companies delayed the release. In an interview with the British newspaper The Daily Telegraph on March 24, 2011, Debbie Harry revealed that the band would be releasing the album themselves (i.e., without a record company) in the United Kingdom as part of a special "Collector's Pack" in conjunction with Future Publishing. The pack includes the album, a special 132-page magazine charting the making of the album and the band's history, as well as many archive photographs, four postcards, six badges and a poster. It was made available in the UK from 1 June 2011 in over 3000 non-traditional music retail outlets including Tesco, Asda, Waitrose, WH Smith and Sainsburys. The album, by itself, was released on July 4, 2011 and was released in the United States on September 13, 2011 exclusively through Amazon.com.