Originally it was located entirely on Manzanillo Island, surrounded by Limon Bay, Manzanillo Bay, and the Folks River; however, since the disestablishment of the Panama Canal Zone, the city's limits have been redefined to include Fort Gulick, a former U.S. Army base, as well as the former Panama Canal Zone towns of Cristobal, Margarita, and Coco Solo.

Under the 1936 Hull–Alfaro Treaty, the United States ceded the "Colón Corridor" from the Canal Zone; this was a strip under Panamanian jurisdiction just wide enough to build a road 4 miles (6.4 km) long connecting the city to the main eastern portion of the republic.

The Free Trade Zone has since been expanded through land reclamation on the Folks River and annexation of parts of France Field (now Enrique Adolfo Jiménez Airport) and Coco Solo.

A massive restoration and reconstruction project, involving parks, avenues and historic buildings and monuments, began in late 2014[4] and uses the hashtags "#RenovaciónColón", "#CiudadDeColón", "#RenovationColon (Renovation of Colón)" and "#CityOfColon".

Nonetheless, the June-to-December period, with an average monthly rainfall of around 415 mm or 16.3 in, is so wet that Colón rivals La Ceiba, Honduras as the wettest sizable city in Central America.

European and American expatriate communities, as well as Panamanians of Greek, Italian, Jewish, Chinese and Indian/South Asian heritage, started moving to Panama City, to former Canal Zone towns, and overseas.

Colón is home to Correcaminos Colon, 2016 Basketball Champion of Panama and member of the FIBA Americas League.