The 23th-27th January trip, which was expected, will be Francis' third World Youth Day.
He attended the event in Brazil in 2013, months after his election, and in Poland in 2016 (pictured below).
A brief statement from the Vatican said the pope had accepted an invitation from the Panamanian government and Catholic bishops to visit.
There have been calls for Francis to stop in El Salvador en route to or from Panama to pray at the tomb of murdered Archbishop Oscar Romero, whom Francis plans to make a saint in October at the Vatican.
The statement on Monday made no mention of a Salvador leg of the January trip.
While in Panama, Francis is expected to consecrate a colonial-era basilica that recently was restored.
Panamanian organisers said they also were looking to set up papal visits to people who are sick or living on the margins, typical stops during Francis' trips abroad.
President Juan Carlos Varela tweeted that he "shares the joy and excitement of the Panamanian people" and promised full government support for the pope's visit.
Reporting by Associated Press.
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