This literature review article addresses the diplomatic process, social tensions, and political positions that converged in the historic hoisting of the Panamanian flag in the Canal Zone in the early 1960s. The analysis is framed within the evolution of bilateral relations between Panama and the United States, all stemming from the Hay-Bunau-Varilla Treaty of 1903, and the escalation of Panamanian nationalism in the subsequent decades. We will examine the events of the November 3, 1959 riots, the subsequent and crucial diplomatic mission of Undersecretary of State Livingston Merchant, and the complex internal political debate within the U.S. administration of President Dwight D. Eisenhower. The formal request by Panama for the raising of its flag and the intense controversy this generated in Washington are analyzed, where Cold War anti-communism and the interests of the resident American community ("zonians") clashed with the need to preserve hemispheric stability. The applied methodology was based on a descriptive and analytical approach, supported by an exhaustive review of primary sources (official documents, communiqués, and press of the time) and secondary sources (academic works and monographs), organized and validated through criteria of relevance and reliability. The research concludes with an assessment of the 1960 diplomatic resolution, analyzing its impact on Panamanian national consciousness, viewing it not as a final concession, but as a first step toward full sovereignty, setting a crucial precedent that would culminate in the Torrijos-Carter Treaties.