The Photodetector Array Camera and Spectrometer (PACS) is one of the three science instruments for ESA's far infrared and submillimetre observatory Herschel. It employs two Ge:Ga photoconductor arrays (stressed and unstressed) with 16 × 25 pixels, each, and two filled Si bolometer arrays with 16 × 32 and 32 × 64 pixels, respectively, to perform imaging line spectroscopy and imaging photometry in the 60-210 μ m wavelength band. In photometry mode, it will simultaneously image two bands, 60-85 or 85-130μ m and 130-210μ m, over a field of view of /sim 1.75'× 3.5', with full beam sampling in each band. In spectroscopy mode, it will image a field of ˜ 50''× 50'', resolved into 5 × 5 pixels, with an instantaneous spectral coverage of ˜ 1500km/s and a spectral resolution of ˜ 175km/s. In both modes background-noise limited peformance is expected, with sensitivities (5 σ in 1h) of 3-10× 10-18 W/m2, respectively. We describe the design of the instrument and its observing modes, report first results from instrument level tests of the Qualification Model, and give examples of the observing capabilities of PACS onboard Herschel for several key questions of modern astronomy, illustrated by examples from the emerging Guaranteed Time Programmme of the PACS consortium. This work is supported by the following funding agencies: ASI (Italy), BMVIT (Austria), CEA/CNES (France), DLR (Germany), ESA-PRODEX (Begium), and CDTI (Spain).