🇵🇦 Panama · Panama City and the Canal
Few capitals in the world manage what Panama City does: fitting into a few kilometers the ruins of a city founded more than five centuries ago, a colonial quarter of cobbled streets and iron balconies, a tropical rainforest with monkeys and sloths, and a forest of glass towers reflected in the Pacific bay. It's a city of contrasts, vibrant and cosmopolitan, marked forever by the Canal that put it on the map of world trade.
Travelers find a fascinating mix here: Casco Antiguo (San Felipe), a Unesco World Heritage Site, with its plazas, its cathedral, its rooftops and its nightlife; the solitary ruins of Panamá Viejo, the first city on the American Pacific, also inscribed by Unesco; the spectacle of gigantic ships crossing the Miraflores Locks; and a modern skyline that earned it the nickname 'the Dubai of Central America'. All bathed in tropical heat, with the dollar as currency and a cuisine mixing Afro-Caribbean, Indigenous and Spanish roots.
This guide covers the capital with a practical and warm eye: how to visit the Canal and its locks, what to see in Casco Antiguo and Panamá Viejo, how to get around by Metro and taxi, where to stay and eat, and how to use the city as a base for discovering the rest of the country. Panama City is the best gateway to a country small in size but enormous in experiences, between two oceans.
The history of Panama City is the history of a city founded, destroyed and born again. The first city, today called Panamá Viejo, was founded on 15 August 1519 by the Spanish conquistador Pedrarias Dávila (Pedro Arias de Ávila), becoming the first European city on the Pacific coast of the Americas. From its port the expeditions to Peru set out, and through its streets passed much of the gold and silver of the Spanish empire on its way to Spain. That wealth made it a target for pirates: in 1671 the Welsh pirate Henry Morgan sacked and razed the city, leaving it in ruins. Two years later, in 1673, the Spanish decided to refound it some 8 km to the west, on a peninsula easier to defend and ringed with walls: so was born Casco Antiguo (San Felipe), today the historic heart of the capital. For centuries Panama was a key transit route between the oceans: colonial gold crossed the isthmus, then the California gold seekers of the 19th century (with the trans-isthmian railway of 1855) and, finally, the ships of the whole world thanks to the Canal. Panama belonged to Gran Colombia after independence from Spain in 1821, and separated from Colombia on 3 November 1903, in a process tied to the construction of the Canal by the United States. The Panama Canal, opened in 1914, defined the city's destiny; after decades of American administration and the historic signing of the Torrijos-Carter Treaties (1977), the Canal passed into Panamanian hands on 31 December 1999. Today the capital is a leading financial and logistics center in Latin America. The full story is on our history page.
Read the full history ↓The province of the capital and the Canal: from the first city on the American Pacific (1519) to the modern skyline of Panama City, with the Casco Viejo and Panamá Viejo — World Heritage Sites — and the Miraflores locks.
Read the history of Panamá →No exact prices: a scale from $ (budget) to $$$$$ (luxury), with 2-3 options per category.
Origins, formation and what the sources say.
The history of Panama City begins on 15 August 1519, when the Spanish conquistador Pedro Arias de Ávila, known as Pedrarias Dávila, founded the city of Nuestra Señora de la Asunción de Panamá on the Pacific coast of the isthmus. With that act, Panama became the first permanent European city established on the Pacific coast of the entire American continent, barely six years after Vasco Núñez de Balboa sighted that 'South Sea' in 1513.
The location was no accident. The region was already inhabited by Indigenous peoples, and the name 'Panamá' is usually attributed to a word from the original languages meaning 'abundance of fish' or 'of butterflies', depending on the interpretation. For the Spanish, the isthmus was the narrowest point between the two oceans, an unbeatable strategic position for connecting the Caribbean to the newly discovered Pacific and launching from there the conquest of the lands to the south.
From its port, a few years later, Francisco Pizarro's expeditions set out for Peru. When the gold and silver of the Inca empire began to flow, Panama became a key piece of the Spanish trade route: the riches of Peru arrived by sea at the city, crossed the isthmus overland (by the Camino Real and the Camino de Cruces) to Caribbean ports such as Nombre de Dios and, later, Portobelo, and from there sailed in fleets for Spain. That role as a great hub of colonial commerce would mark the city's destiny forever.
The enormous wealth passing through Panama made it a coveted target for Spain's enemies, especially the pirates and privateers infesting the Caribbean. The decisive blow came in January 1671, when the Welsh pirate Henry Morgan, leading a large expedition, crossed the isthmus from the Caribbean, defeated the Spanish forces on the outskirts of the city and took it. Panama was sacked and burned, and left virtually destroyed.
The original city, the one we now call Panamá Viejo, was never rebuilt. The colonial authorities understood that its position, on an open plain, was hard to defend. So, two years after the disaster, in 1673, they decided to refound the city some 8 kilometers to the west, on a small rocky peninsula surrounded by sea and far easier to fortify. So was born the quarter we know today as Casco Antiguo, or San Felipe.
The new city was ringed with walls, bastions and moats, and inside them rose churches, convents, plazas and mansions. That walled colonial layout is what survives today and what, together with the ruins of Panamá Viejo, Unesco recognized. Casco Antiguo mixes Spanish colonial architecture with later French, Italian and Caribbean additions, the fruit of the different stages the city lived through, including the era of the Canal's construction.
After independence from Spain in 1821, Panama voluntarily joined Simón Bolívar's Gran Colombia and, when that dissolved, remained part of the Republic of Colombia (New Granada). Throughout that century the isthmus kept its historic role as the great transit route between the oceans, a function that would enjoy a spectacular new boom in the middle of the 19th century.
The trigger was the California gold rush, from 1848. Thousands of people wanting to reach California from the east coast of the United States found that crossing the isthmus of Panama was far quicker and safer than traversing all of North America overland or rounding South America by Cape Horn. Panama filled with travelers crossing from Caribbean to Pacific to re-embark for the American west.
That mass flow drove a pioneering project: the Panama Railroad, opened in 1855, which for the first time linked both oceans by rail across the isthmus. It was one of the first transcontinental railways in the world and an enormously profitable business. The city grew and modernized to the rhythm of that traffic in people and goods. This period foreshadowed, on a small scale, what would be the great work of the following century: a permanent passage between the two oceans through the heart of Panama.
By the late 19th century, the idea of opening a canal across the isthmus had become a worldwide obsession. The first to seriously attempt it were the French: in 1881 a company led by Ferdinand de Lesseps, builder of the Suez Canal, took on the titanic work. But the French project failed spectacularly, devastated by tropical disease (malaria and yellow fever, which killed thousands of workers), by technical difficulties and by an enormous financial scandal. The company went bankrupt around 1889, leaving the work unfinished.
The United States then took up the project, but negotiations with Colombia, of which Panama was a part, stalled. In that context, on 3 November 1903, Panama proclaimed its separation from Colombia and constituted itself as an independent republic, in a move that had decisive backing from the United States, deeply interested in building the canal. A few days later the new Panamanian state and the United States signed the Hay-Bunau-Varilla Treaty, granting Washington control of a strip of territory (the Canal Zone) to build and run the waterway.
The American works, successful this time thanks to advances in controlling tropical disease (Dr William Gorgas's sanitary campaign) and to lock engineering, culminated with the opening of the Panama Canal on 15 August 1914. The project transformed world trade and established Panama City as a nerve center of the global economy, but it also left a country split in two by a foreign strip through its own heart.
For much of the 20th century, the presence of the Canal Zone - a territory administered by the United States that crossed the country from ocean to ocean - was an open wound and a constant source of tension for Panama. The claim to sovereignty over the Canal and its zone became one of the great national causes. There were moments of sharp conflict, such as the events of 9 January 1964 (remembered as Martyrs' Day), when clashes over the right to raise the Panamanian flag in the Zone left several dead.
The turning point came in 1977, when the Panamanian leader Omar Torrijos and US president Jimmy Carter signed the Torrijos-Carter Treaties. These agreements established that the United States would progressively transfer control of the Canal to Panama and that the waterway would be run by Panamanians from the end of the century, while also guaranteeing its permanent neutrality. It was a historic milestone for the country.
The culminating moment came on 31 December 1999, when the Panama Canal passed entirely into Panamanian hands, and with it the whole of the former Canal Zone, reintegrated into national territory. Since then the Canal has been run by the Panama Canal Authority, a Panamanian state body, and has become a key economic engine for the country. In 2016 the Canal expansion opened, with a third set of locks for the giant neopanamax vessels, reaffirming its place in world trade.
With the Canal in Panamanian hands and a dollarized, service-oriented economy, Panama City has gone through spectacular growth in recent decades that has changed its face. The coastal strip along the bay filled with glass towers, hotels, office blocks and apartments, giving it the modern skyline that earned it the nickname 'the Dubai of Central America'. The capital established itself as one of Latin America's leading financial, logistics and air-connection centers, with Tocumen airport as a major regional hub and the Metro as the first in Central America.
That modern rush coexists with an enormous historic heritage, recognized by humanity as a whole. In 1997 Unesco inscribed on its World Heritage List the combined site of the archaeological site of Panamá Viejo and the historic district of Panamá (Casco Antiguo), valuing the unique testimony they offer about the continent's colonial urban history and about Panama's role as a great transit route between the oceans across the centuries.
Today the city offers travelers the fascinating contrast that defines it: the ruins of the first city on the Pacific, the walled colonial quarter full of life, the tropical forest of its Metropolitan Park and Cerro Ancón, the spectacle of ships crossing the Canal and a profile of ultramodern towers, all within a few kilometers and beside the sea. That blend of eras, cultures (Indigenous, Spanish, Afro-Caribbean and the many migrations that came with the Canal) and landscapes is what makes Panama City a capital unique of its kind.