Bill Wall, a clinical social worker who had served in the military for 30 years, is one of many who advocates service dogs as part of treatment for PTSD. Wall, a veteran of Operation Iraqi Freedom, says, "You can feel a lot more safe with a dog around you... The dog has been trained to pick up on any fear or anxiety you might be feeling. They can actually smell it. The dog then does something to distract you or make you feel less anxious. When you become overloaded, the dog knows it and helps you refocus. Even before you realize you're overloaded, the dog will pick up on it. For example, if you're in a crowd of people and you begin showing subtle signs of distress, your dog will try to create a buffer zone around you. The dog is trying to give you a sense of safety."
For more details, see this Military.com article. For more on PTSD and treatment options, see this Military.com section.