Twenty-three U.S. troops, 314 Panamanian soldiers, and some 200 civilians died in the operation.
Noriega hid in bombed and burned-out neighborhoods before he sought refuge in the Vatican Embassy, which was besieged by U.S. troops playing loud rock music.
He gave up on Jan. 3, 1990, and was flown to Miami for trial on drug-related charges.
Bush was praised for a precise and limited strike, and pundits said the president, with soaring approval ratings, had shed the wimpy image that had plagued him during the 1988 presidential campaign.
Noriega's return to the U.S. as a prisoner of war was "a triumph for diplomacy and a triumph for justice," said the late Democratic Senator Edward M. Kennedy of Massachusetts, normally a harsh critic of Bush.
Critics, however, saw a dangerous precedent in Bush's willingness to send troops into harm's way to topple a foreign leader, particularly one who had been supported for years by the U.S. The United Nations General Assembly called the invasion "a flagrant violation of international law and of the independence, sovereignty and territorial integrity of states."
Noriega was convicted two years after the invasion, and served 17 years at a minimum-security prison outside Miami, where he received special treatment as a prisoner of war and lived in his own bungalow with a TV and exercise equipment.
When his sentence ended, he was extradited to France, which convicted him for laundering millions of dollars in drug profits through three major French banks, and investing drug cash in three luxury Paris apartments.
Noriega suffers from high blood pressure and partial paralysis as the result of a stroke several years ago, according to his lawyers in France.
He returns to a nation that has seen a sustained economic boom, fueled largely by the return of the Panama Canal and surrounding land and military bases to Panamanian control in 2000. Dozens of new skyscrapers have risen around the war-scarred capital, and tourism is flourishing.
The ex-dictator's return "should finally close a chapter of history that we do not ever want to happen again," said former Panamanian Foreign Minister Samuel Lewis, whose family was forced out of the country in retaliation for opposing Noriega.
"Hopefully, we can put this sad chapter of history in the past and focus on the future," Lewis said.
Panama remains a base for international drug trafficking and money laundering, however, and it also suffers from street crime and income inequality. In many parts of society, there is nostalgia for the Noriega years.
Julio Rangel, a 63-year-old painter who sells his works in a park in the capital, said Noriega "doesn't represent any sort of danger to the people here" and never deserved to become the target of a U.S. invasion.
"What the North Americans wanted to do was destroy our defense forces," he said.
Omar Rodriguez, who was selling soft drinks nearby, said that in Noriega's time, "there was more work, and there wasn't criminality like today."
"I can't speak ill of him," Rodriguez said.
Noriega faces immediate punishment for the murders of military commander Moises Giroldi, slain after leading a failed rebellion on Oct. 3, 1989, and Hugo Spadafora, a political opponent found decapitated on the border with Costa Rica in 1985.
He also could be tried in the deaths of other opponents during the same period.
"He's coming to serve his sentences, and that's important for the families of the victims," said former Panamanian Attorney General Rogelio Cruz. "His presence here is important because he'll satisfy the demands of justice for his criminal convictions and the trials that he still has to face."
Zamorano reported from Panama City. Oleg Cetinic in Paris and Michael Weissenstein in Mexico City contributed to this report.
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