The Panama Canal is a waterway (a canal) in the country of Panama in Central America, that connects the Atlantic Ocean and the Pacific Ocean. Because of the way Panama twists, the entrance to the Pacific Ocean is farther east than the entrance to the Atlantic Ocean. This is the opposite of what one would expect.
The Panama Canal is 77 km (48 miles) long and cuts across the Isthmus of Panama. At each end it uses three pairs of locks for lifting and lowering ships on different water levels. This saves ships 15,000 km (10,000 miles) compared to going around South America. Each year, about 14,000 ships come through the canal. By 2002, around 800,000 ships came through. The biggest ships that can go through the Panama Canal are called Panamax. New locks to allow ships more than twice as big are being built.
The French people tried building it in 1880, but couldn't finish it. It was finally finished in 1914 by the United States who spent ten years and 375 million dollars building it. It is such an amazing achievement that it has been named one of the Seven Wonders of the Modern World.