It is situated on the banks of the Nemunas River opposite Sovetsk, 8 km (5.0 mi) south from Pagėgiai, in Tauragė County.

The Queen Louise Bridge originally built in 1907 links Panemunė to the city of Sovetsk (Tilsit until 1946) just south across the river.

The area comprising today's Panemunė used to be the northern trans-Memel (Neman) suburb of Tilsit, then a Prussian and later also German town (as of 1871).

After Germany's defeat in World War I, the trans-Memel suburb was disentangled from Tilsit (with the rest of the Memelland/Klaipėda Region detached from the Province of East Prussia) in 1920.

Following World War II, the whole area was seized by the Soviet Union and in 1947 Übermemel, renamed as Panemunė (like all the Klaipėda Region), was returned to then Soviet-occupied Lithuania.