Description: In this study two carbonate environments are compared and contrasted; the Gulf of Panama and the Gulf of Chiriquı´ on the Pacific side of Panama. These two embayments are in close geographic proximity at latitudes between 7° N and 9° N. The Gulf of Panama and the Gulf of Chiriquı´ are characterized by contrasting oceanographic conditions with year-round stable non-upwelling conditions in the Gulf of Chiriquı´ and strong seasonal upwelling in the dry season (December to April) in the Gulf of Panama. The upwelling variations only have a limited influence on the amount of carbonate produced; however, they do have a major impact on the occurrence of specific carbonate producing biota. In addition, carbonate production and distribution is influenced in both gulfs by the occurrence of islands and by terrigenous input. Terrigenous material is found mainly in the smaller grain sizes (〈63 to 250 lm) that can be transported easily by currents and waves. Carbonate dominant sediments (carbonate sands and mixed carbonate–siliciclastic sands) mainly occur around the islands and are dominated by larger grain-sizes (〉500 lm). The Gulf of Panama and the Gulf of Chiriquı´ both show warm and temperate carbonate-producing biota, with carbonate producers from tropical (corals) to mixed tropical to cool-water (coralline red algae) and cold-water (balanids) environments. The Gulf of Chiriquı´ is characterized by oligotrophic to mesotrophic conditions resulting in a photozoan (coral) and/or rhodolith- facies in shallow-water areas surrounding the islands and a molluscdominated facies in deeper waters towards the shelf edge. Seasonal upwelling causes temporary eutrophic conditions in the Gulf of Panama, which results in a heterozoan facies around the islands dominated by balanids, echinoderms and molluscs. Thus a ‘cool-water’ carbonate fauna and eutrophic conditions can exist in the tropics within an area prone to seasonal upwelling. The distinct facies differences found on the Pacific shelf of Panama stress the importance of variations in oceanographic conditions, upwelling versus nonupwelling, in determining carbonate production and associated facies patterns in the tropics.