Late Cenozoic benthic foraminiferal faunas from the Caribbean Deep Sea Drilling Project (DSDP) Site 502 (3052 m) and East Pacific DSDP Site 503 (3572 m) were analyzed to interpret bottom-water masses and paleoceanographic changes occurring as the Isthmus of Panama emerged. Major changes during the past 7 Myr occur at 6.7-6.2, 3.4, 2.0, and 1.1 Ma in the Caribbean and 6.7-6.4, 4.0-3.2, 2.1, 1.4, and 0.7 Ma in the Pacific. Prior to 6.7 Ma, benthic foraminiferal faunas at both sites indicate the presence of Antarctic Bottom Water (AABW). After 6.7 Ma benthic foraminiferal faunas indicate a shift to warmer water masses: North Atlantic Deep Water (NADW) in the Caribbean and Pacific Deep Water (PDW) in the Pacific. Flow of NADW may have continued across the rising sill between the Caribbean and Pacific until 5.6 Ma when the Pacific benthic foraminiferal faunas suggest a decrease in bottom-water temperatures. After 5.6 Ma deep-water to intermediate-water flow across the sill appears to have stopped as the bottom-water masses on either side of the sill diverge. The second change recorded by benthic foraminiferal faunas occurs at 3.4 Ma in the Caribbean and 4.0-3.2 Ma in the Pacific. At this time the Caribbean is flooded with cold AABW, which is either gradually warmed or is replaced by Glacial Bottom Water (GBW) at 2.0 Ma and by NADW at 1.1 Ma. These changes are related to global climatic events and to the depth of the sill between the Caribbean and Atlantic rather than the rising Isthmus of Panama. Benthic foraminiferal faunas at East Pacific Site 503 indicate a gradual change from cold PDW to warmer PDW between 4.0 and 3.2 Ma. The PDW is replaced by the warmer, poorly oxygenated PIW at 2.1 Ma. Although the PDW affects the faunas during colder intervals between 1.4 and 0.7 Ma, the PIW remains the principal bottom- water mass in the Guatemala Basin of the East Pacific.