A chronology of key events:
1502 - Spanish explorer Rodrigo de Bastidas visits Panama, which was home to Cuna, Choco, Guaymi and other indigenous peoples.
Panama City grew rapidly during years of canal construction
Old city founded in 1519
Population (metro): 1.14 million
1519 - Panama becomes Spanish Vice-royalty of New Andalucia (later New Granada).
1821 - Panama becomes independent of Spain, but joins the confederacy of Gran Colombia, which also comprises Colombia, Venezuela, Ecuador, Peru and Bolivia.
1830 - Panama becomes part of Colombia following the collapse of Gran Colombia.
1846 - Panama signs treaty with US allowing it to build a railway across the isthmus.
1880s - France attempts to build a canal linking the Atlantic and Pacific oceans, but fails due to financial difficulties and the death of more than 20,000 workers from tropical diseases.
Independence, building the canal
1903 - Panama splits from Colombia and becomes fully independent. US buys rights to build Panama Canal and is given control of the Canal Zone in perpetuity.
1914 - Panama Canal completed.
1939 - Panama ceases to be a US protectorate.
1968-81 - General Omar Torrijos Herrera, the National Guard chief, overthrows the elected president and imposes a dictatorship.
1977 - US agrees to transfer the canal to Panama as from 31 December 1999.
1981 - Torrijos dies in plane crash.
1983 - Former intelligence chief and one-time US Central Intelligence Agency informant Manuel Noriega becomes head of the National Guard, builds up the size of the force, which he renames the Panama Defence Forces, and greatly increases its power over Panama's political and economic life.
1988 - US charges Noriega with drug smuggling; Noriega declares state of emergency in the wake of a failed coup.
1989 - Opposition wins parliamentary elections, but Noriega declares results invalid. Noriega declares "state of war" in the face of increased threats by Washington. US invades Panama, ousts Noriega and replaces him with Guillermo Endara.
1991 - Parliament approves constitutional reforms, including abolition of standing army; privatisation begins.
1992 - US court finds Noriega guilty of drug offences and sentences him to 40 years imprisonment, to be served in a US prison.
1999 - Mireya Moscoso becomes Panama's first woman president.
1999 December - Panama takes full control of the Panama Canal, ending nearly a century of American jurisdiction over one of the world's most strategic waterways.
2000 - Moscoso announces creation of a panel to investigate crimes committed while military governments were in power between 1968 and 1989.
2002 January - President Moscoso sets up a commission to investigate corruption. The move follows large street protests against alleged graft in government circles.
2002 April - Panama removed from international list of uncooperative tax havens after promising to make its tax system more transparent.
2003 September - National strike over management of social security fund paralyses public services. More than 40 hurt in clashes.
Fireworks in Panama City mark 100 years of independence
2004 May - Martin Torrijos, son of former dictator Omar Torrijos, wins presidential elections.
2004 August-September - President Moscoso pardons four Cuban exiles Havana accuses of plotting to kill Cuban President Castro. Cuba severs ties. Newly-inaugurated President Martin Torrijos pledges to repair relations; both countries agree in November to restore ties.
2004 November - Panama Canal earns record revenues of $1 billion for the financial year.
2005 May-June - Plans to increase pension contributions and raise the retirement age spark weeks of protests and strikes. President Torrijos had promised to reform the cash-strapped social security system.
2006 - At least 50 people die after taking cough medicine tainted with an industrial solvent imported from China.
2006 October - Voters in a referendum back a $5.2bn plan to upgrade the Panama Canal. The scheme aims to double the capacity of the waterway.
2006 December - Panama and the US agree on a free trade deal. The accord cannot come into force until it has been approved by the US Congress.
2007 September - Work to widen Panama Canal begins.
2008 February - Fatal shooting of union leader triggers violent clashes between police and construction workers in Panama City.
2008 December - A Russian warship sails through the Panama Canal for the first time since World War II. The canal was shut to the Soviet Union during the Cold War.
2009 May - Ricardo Martinelli wins presidential election.
2010 July - Noriega is sentenced to seven years in prison by a French court for money laundering. He was extradited from the US in 2008 after serving a 17-year sentence for drug trafficking.
2010 October - Chinese freighter becomes the millionth vessel to cross the Panama Canal three years before its 100th anniversary.
2010 December - President Martinelli denies information from a US diplomatic cable released by Wikileaks suggesting he asked the US to help wiretap rivals, but acknowledges asking for help against criminals.
2011 March - Mining code reforms reversed following protests from indigenous groups and environmentalists.
2011 October - US Congress finally approves long-stalled free trade agreement with Panama. President Martinelli hails the agreement as a "tool for the economic development" of the country.
2011 December - Noriega is repatriated and is taken straight to prison.