Claim: Panama is in Central America.

Central America -LRB- América Central or Centroamérica -RRB- is the southernmost , isthmian portion of the North American continent , which connects with South America on the southeast . Central America is bordered by Mexico to the north , Colombia to the southeast , the Caribbean Sea to the east , and the Pacific Ocean to the west . Central America consists of seven countries : Belize , Costa Rica , El Salvador , Guatemala , Honduras , Nicaragua , and Panama . The combined population of Central America is between 41,739,000 -LRB- 2009 estimate -RRB- and 42,688,190 -LRB- 2012 estimate -RRB- .   Central America is a part of the Mesoamerican biodiversity hotspot , which extends from northern Guatemala through to central Panama . Due to the presence of several active geologic faults and the Central America Volcanic Arc , there is a great deal of seismic activity in the region . Volcanic eruptions and earthquakes occur frequently ; these natural disasters have resulted in the loss of many lives and much property .   In the Pre-Columbian era , Central America was inhabited by the indigenous peoples of Mesoamerica to the north and west and the Isthmo-Colombian peoples to the south and east . Soon after Christopher Columbus 's voyages to the Americas , the Spanish began to colonize the Americas . From 1609 until 1821 , most of the territory within Central America -- except for the lands that would become Belize and Panama -- was governed by the Viceroyalty of New Spain from Mexico City as the Captaincy General of Guatemala . After New Spain achieved independence from Spain in 1821 , some of its provinces were annexed to the First Mexican Empire , but soon seceded from Mexico to form the Federal Republic of Central America , which lasted from 1823 to 1838 . The seven states finally became independent autonomous states : beginning with Nicaragua , Honduras , Costa Rica , and Guatemala -LRB- 1838 -RRB- ; followed by El Salvador -LRB- 1841 -RRB- ; then Panama -LRB- 1903 -RRB- ; and finally Belize -LRB- 1981 -RRB- .