The Republic of Panama recently experienced a limited forest transition. After five decades of decline, the total forest cover increased by 0.36% yr–1 between 1992 and 2000; however, mature forest cover simultaneously decreased by 1.3% yr–1. This limited forest transition at the national scale comprised two distinctly different patterns of recent forest-cover change related to historical land use. Districts that were largely deforested when the first national survey of forest cover was completed in 1947 experienced a strong forest transition between 1992 and 2000. In these, the proportion of the population employed in agriculture decreased by an average of 31% and natural secondary forest succession increased the total forest cover by an average of 85% between 1992 and 2000. In contrast, no forest transition was evident for districts that were largely forested in 1947. In these, the absolute number of people employed in agriculture remained constant, old-growth forest cover decreased by 8% on average, and natural secondary forest succession increased, so that the total forest cover tended to be static between 1992 and 2000. Historical land use, an index of human poverty, and the population density of agricultural workers explained 61% of the among-district variation in forest cover in 2000, with forest concentrated in areas where populations were small and poor. Historical land use and gross income per hectare from agriculture explained 23.5% of the among-district variation in forest-cover change between 1992 and 2000. The early history of forest loss, an uneven distribution of people, and disparities in farm income contributed to the limited forest transition observed in Panama.