Urbanization decreases habitat availability and leaves small and isolated patches of habitat, surrounded by an urban matrix that hinders dispersal for most organisms. Insects are among the most affected groups in terms of species richness, density, and abundance due to urbanization. Among insects, butterfly communities are often used as indicators because they are highly sensitive to disturbance. To analyze how urbanization affects alpha and beta butterfly diversity in urban forest fragments in Panama City, we studied these communities across dry and rainy seasons and examined their relationship with landscape, habitat, and environmental factors. Sampling involved one transect in each of four tropical urban forest fragments along an urbanization gradient. Butterflies were sampled with entomological nets and bait traps on different sampling dates, while environmental parameters were recorded at meteorological stations within each urban patch on each date. Landscape predictors were obtained from a geographic information system. We recorded a total of 2,192 individuals, belonging to six families, 16 subfamilies, 105 genera, and 142 species. We found that diversity-based on Hill's numbers-changed significantly among urban forest fragments, while richness remained unchanged. Seasonal comparisons revealed significant turnover of species during the rainy and dry seasons. Butterfly richness and abundances (total, Nymphalidae, and Pieridae) were positively affected by urbanization cover percentage, patch size, and plant richness, while sampling date and temperature have negative impacts on the butterfly community. Finally, Shannon diversity was negatively influenced by urbanization and plant richness, whereas Simpson index responded in the opposite direction to the same factors. Tropical butterfly communities will rely on conserving remaining tropical urban fragments, implementing measures to enhance connectivity, and restoring these green spaces.