The transfer of the Panama Canal to Panama was a significant milestone that stemmed from decades of negotiation and political change. The Torrijos–Carter Treaties, signed on September 7, 1977, established the framework for the handover, which aimed to rectify the long-standing grievances stemming from U.S. control over the Canal and the surrounding Canal Zone since its construction in the early 20th century. The agreement mandated that control would be gradually transferred to Panama by the end of the century, a process marked by its complexities and occasional tensions between the two nations.

As the deadline approached, both nations engaged in intense preparations to ensure a smooth transition. On December 31, 1999, a ceremony was held in which U.S. representatives, including President Bill Clinton, officially relinquished their claims. The event was attended by Panamanian President Mireya Moscoso, military leaders, and citizens who celebrated the newfound sovereignty over what was once a symbol of U.S. imperialism in Latin America. The ceremonies included the lowering of the U.S. flag and the raising of the Panamanian flag, signifying the official transfer of authority.

This event represented not only a change in territorial control but also a shift in the political relationship between the United States and Panama, indicating an era of increased autonomy for Panama. The Canal plays a vital role in international maritime trade, and its control is crucial for Panama's economy. The successful transition highlighted Panama's ability to manage this essential waterway and signaled to other nations in the region that self-determination was achievable.