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Abstract Westward-propagating Caribbean Current eddies modify the volume-integrated potential vorticity (PV) balance in the western Caribbean Sea, influencing the circulation of the Panamá–Colombia Gyre (PCG) and coastal currents hundreds of kilometers to the south of the eddies’ mean trajectory. Using 22 years of output from the Hybrid Coordinate Ocean Model, we apply a volume-integrated eddy phase-averaged 1.5-layer PV balance, showing that PV fluxes into the PCG region are balanced by frictional PV dissipation represented by linear drag along the coastline. Coastal currents in the PCG region vary by a factor of 2 in phase with the passage of a Caribbean Current eddy over the 116-day average eddy period. Flow separation at the Isthmus of Panamá results in a vortex shed from the Darien Gulf, which slows the coastal currents in the gyre region from their maximum during eddy events. An annual ensemble average PV balance in the gyre region shows that the mean PV influx to this region is higher from August to October. Correspondingly, the range of coastal currents in the gyre region over an eddy event is modestly influenced by the PV influx magnitude. Eddy-influenced reversals in the coastal current can occur between November and July at Bocas del Toro and year-round at Colón. Such coastal current reversals are important for the alongshore transport of larvae, freshwater, and chemical tracers.