Mexico Beach is a city in Bay County, Florida, United States. It is located 25 miles southeast of Panama City on the Florida Panhandle. It is pa…Mexico Beach is a city in Bay County, Florida, United States. It is located 25 miles southeast of Panama City on the Florida Panhandle. It is part of the Panama City-Panama City Beach, Florida Metropolitan Statistical Area in North Florida. The population was 916 at the 2020 census, down from 1,072 at the 2010 census.