Panic Puppet Zone is the seventh (and potentially final) zone of Sonic 3D for the Sega Mega Drive and Sega Saturn, coming after Gene Gadget and before The Final Fight (if the player has collected the Chaos Emeralds).
Panic Puppet Zone has a different Act structure to the preceding Zones; the first Act has Sonic rescuing Flickies that haven't been roboticized yet, and are simply held captive in containers instead of badniks. In the second Act, there are no birds to free, and all the player must do is reach the end of the level. Eggman has deployed an army of robots to stop Sonic in his tracks, and there are only a few rings to be found in the level.
This Zone is the core of the Doctor's operation on Flickies' Island; a massive military/industrial complex bristling with conveyor belts, turrets, and trapdoors. At the very center of the Zone lies a gigantic, Eggman-shaped tower, reminiscent of the one constructed in Stardust Speedway's Bad Future on Sonic CD. In terms of gameplay, it is essentially a palatte swap of Gene Gadget Zone but with different badniks and a few new features.
The third Act is the boss inside the Robotnik statue itself. It consists of three parts; the first part has the arms of the robot designed as spiked maces. Sonic must get near one to lure Robotnik into dropping it, then hit the flashing siren on the arm's shoulder to damage it.
The second part uses flamethrowers; the same fire that the Doctor weaponized for use in Volcano Valley. When Eggman's machine blows flames, Sonic must hit the flashing shoulder-pad again.
In the last part, Eggman uses an ice cannon. The cannon can shoot multiple frozen bullets that bounce around on the floor and spread out. Sonic must stay in the corner of the cannon that's firing, as the pellets don't tend to ricochet in that direction.
Each flashing shoulder-pad must be hit a total of three times each in every part. After the player beats Eggman, the normal ending of the game begins. However, if the player has collected all of the Chaos Emeralds, then Sonic will be transported to the Final Fight.
There was a different theme for Panic Puppet in the Sega Saturn Version, which has also been reused - it was remixed heavily for Lost Impact in Shadow the Hedgehog (game), and was lightly remixed for Metropolis in Sonic Chronicles: The Dark Brotherhood.