A malfunction in a circuit panel distributing power internally to the facility was to blame, according to the airport authority, which set up a "crisis room" to handle the disruption.
Thousands of frustrated passengers faced lines and clogged halls as harried airport staff struggled before blanked-out check-in screens.
Buses ferried some stranded passengers to Panama hotels to spend the night, but many more were left to sit on the floor with their bags next to them.
According to the website FlightAware, which tracks cancelations by airport, around 20 percent of flights departing from Panama's Tocumen International Airport were scrapped.
The aeropuertos.net flight information website said that more than 200 arriving or departing flights were canceled.
Late in the day, operations started to be restored, with more flights taking off, but backlogs continued.
The airport serves more than 90 destinations in the Americas and Europe and receives around 14 million passengers a year.
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