Despite their name, "Panama hats" are traditionally made in Ecuador. In Ecuador, Panama hats are called sombreros de paja toquilla, meaning "hats of toquilla straw."
Panama hats gained popularity in the early 1800s during the building of the Panama Canal, according to Brent Black Panama Hats. Enterprising hat weavers, from what is now Ecuador, travelled to Panama which was once part of what is now Colombia) to sell their wares. Panama hats travelled on the heads of tourists to popular destinations on the coasts of Canada and the United States, spurring a fashion trend that characterizes the region to this day. Authentic Panama hats are woven in Montecristi and Cuenca and exported worldwide.