Caribbean reefs underwent significant biotic change during the Late Oligocene and Early Miocene. This was a critical time in the evolution of the modern Caribbean fauna characterized by increasing endemism resulting from regional extinction of lineages that survive in the modern Indo-Pacific. An understanding of the dynamics and potential causes of the Oligocene/Miocene transition, however, is hampered by the relative lack of well-preserved Oligocene to early Miocene coral faunas in the Caribbean. Here we examine new exposures in the Culebra Formation of Panama that contain a well-preserved coral fauna of Early Miocene age. Taxonomic, stratigraphic, and paleoecologic study of the Culebra Formation exposed along the Gaillard Cut of the Panama Canal allows us to infer the paleoenvironments and reef coral communities from the Panama Canal Basin during this critical interval. The Culebra Formation consists of a deepening upward sequence with shallow-lagoon sediments at the base, overlain by fringing reef facies in the middle of the section, and open-shelf to bathyal facies at the top of the section. We recovered 31 species of reef corals from a combination of new and old collections. Comparison of our collections with other Late Oligocene to Middle Miocene reef coral assemblages confirms that there was a major faunal turnover after deposition of the Upper Oligocene Antigua Formation. This turnover consisted of a large number of extinctions followed by an increased rate of first occurrences so that regional diversity did not change appreciably. Improved stratigraphic resolution at this and other Caribbean localities is required to understand fully the dynamics of change during the Oligocene/ Miocene transition.