Panama City is located in the heart of Northwest Florida. It is the largest city between Pensacola and Tallahassee and the seat of Bay County. Grasped by the shores of St. Andrews Bay, Panama City and its neighborhoods preserve much of the appeal and magnificence of a fishing village while benefiting from the innovative vitality of a progressive city. Panama City was severely affected by Hurricane Michael. Many areas may be closed to visitors. Please check local resources for updates. #850Strong.