The government said it decided to allow the ship to pass on humanitarian ground but stressed that no passenger nor member of crew can disembark on Panamanian soil.
The Zaandam cruise ship has been stranded at sea since March 14 after several South American ports refused to let it dock due to dozens of people aboard shown flu-like symptoms.
On Friday the ship’s Dutch owner Holland America said four passengers had died and two more had tested positive for COVID-19.
On Saturday, Panama’s maritime authority said healthy passengers were being evacuated from the Zaandam to another cruise, the Rotterdam.
More than 130 people, both passengers and crew, have been taken ill on the Zaandam, which had more than 1,800 people on board.
The Zaandam is heading to Fort Lauderdale in Florida but must pass through the Panama Canal to reach it.