Torrijos is best known for negotiating the 1977 Treaties that eventually gave Panama full sovereignty over the Panama Canal, at noon on December 31, 1999.
He had reached the rank of lieutenant colonel by 1966 and in 1968 he and Major Boris Martínez led a successful coup d'état against the democratically-elected president, Arnulfo Arias (Arias himself had led a coup in 1931). Although a two-man junta was appointed, Martinez and Torrijos were the true leaders from the beginning. Soon after the coup, Torrijos was promoted to full colonel and named commandant of the National Guard. They barred all political activity and shut down the legislature. They also seized control of three newspapers owned by Arias' brother, Harmodio and blackmailed the owners of the country's oldest newspaper, La Estrella de Panama, into becoming a government mouthpiece.
In the internal power struggle that followed Torrijos emerged victorious — he exiled Martínez in 1969 and promoted himself to brigadier general. In 1972, the regime held a controlled election of an Assembly of Community Representatives, with a single opposition member. The new assembly approved a new Constitution and elected Demetrio Lakas as president. However, the new document made Torrijos the actual head of government, with near-absolute powers for six years.
Torrijos was regarded by his supporters as the first Panamanian leader to represent the majority population of Panama, which is poor, Spanish-speaking, and of mixed heritage — as opposed to the light-skinned social elite, often referred to as rabiblancos ("white-tails"), who had long dominated the commerce and political life of Panama. He opened many schools and opened job opportunities for the less fortunate. Torrijos instituted a range of social and economic reforms to improve the lot of the poor, redistributed agricultural land and persecuted the richest and most powerful families in the country, as well as independent student and labor leaders. The reforms were accompanied by an ambitious public works program, financed by foreign banks.
Torrijos also negotiated the Torrijos-Carter Treaties over the Panama Canal, signed on September 7, 1977. These treaties passed United States sovereignty over the canal zone to Panama, with a gradual increase in their control over it, leading to complete control after the year 2000. The United States however, retained the permanent right to protect what they see as the neutrality of the canal. The ratification ceremony at Fort Clayton was somewhat of an embarrassment for Torrijos. He was noticeably drunk during the ceremony; his speech was badly slurred and he had to brace himself against the podium to keep from falling.
On the debit side, Torrijos was extremely intolerant of political opposition. Many opponents were imprisoned, exiled, killed, or "disappeared". Also, the public works project was plagued by corruption and nepotism, which turned Panama into one of the countries with the highest per capita public indebtedness.
In 1978, he stepped down as head of the government, but remained de facto ruler of the country while another one of his followers, Aristides Royo was a figurehead president. He also restored some civil liberties; U.S. President Jimmy Carter had told him that the Senate would never approve the Canal treaties unless Torrijos made some effort to liberalize his rule. He planned to return the country to full civilian rule by 1984.
General Torrijos died with several others when his aircraft, a DeHavilland Twin Otter (DHC-6), exploded during its flight. The aircraft disappeared from radar during severe weather, but due to the limited nature of Panama's radar coverage at the time, the plane was not reported missing for nearly a day. The crash site was located several days later, and the body of General Torrijos was recovered by a Special Forces team in the first few days of August. Following a large state funeral, Torrijos was briefly buried in a cemetery in Casco Viejo (the Old City of Panama), before being moved to a mausoleum in the former Canal Zone near Panama City. He was succeeded as commander of the National Guard and de facto leader of Panama by Florencio Flores, who later gave way to Rubén Darío Paredes.