The panopticon is a design of institutional building with an inbuilt system of control, originated by the English philosopher and social theorist Jeremy Bentham in the 18th century. The concept is to allow all prisoners of an institution to be observed by a single prison officer, without the inmates knowing whether or not they are being watched.

Although it is physically impossible for the single guard to observe all the inmates' cells at once, the fact that the inmates cannot know when they are being watched motivates them to act as though they are all being watched at all times. They are effectively compelled to self-regulation. The architecture consists of a rotunda with an inspection house at its centre. From the centre, the manager or staff are able to watch the inmates. Bentham conceived the basic plan as being equally applicable to hospitals, schools, sanatoriums, and asylums. He devoted most of his efforts to developing a design for a panopticon prison, so the term now usually refers to that.

The word panopticon derives from the Greek word for "all seeing" – panoptes. In 1785, Jeremy Bentham, an English social reformer and founder of utilitarianism, travelled to Krichev in Mogilev Governorate of the Russian Empire (modern Belarus) to visit his brother, Samuel, who accompanied Prince Potemkin. Bentham arrived in Krichev in early 1786 and stayed for almost two years. While residing with his brother in Krichev, Bentham sketched out the concept of the panopticon in letters. Bentham applied his brother's ideas on the constant observation of workers to prisons. Back in England, Bentham, with the assistance of his brother, continued to develop his theory on the panopticon. Prior to fleshing out his ideas of a panopticon prison, Bentham had drafted a complete penal code and explored fundamental legal theory. While in his lifetime Bentham was a prolific letter writer, he published little and remained obscure to the public until his death.

Bentham thought that the chief mechanism that would bring the manager of the panopticon prison in line with the duty to be humane would be publicity. Bentham tried to put his duty and interest junction principle into practice by encouraging a public debate on prisons. Bentham's inspection principle applied not only to the inmates of the panopticon prison, but also the manager. The unaccountable gaoler was to be observed by the general public and public officials. The apparently constant surveillance of the prison inmates by the panopticon manager and the occasional observation of the manager by the general public was to solve the age old philosophic question: "Who guards the guards?"

Bentham continued to develop the panopticon concept, as industrialisation advanced in England and an increasing number of workers were required to work in ever larger factories. Bentham commissioned drawings from an architect, Willey Reveley. Bentham reasoned that if the prisoners of the panopticon prison could be seen but never knew when they were watched, the prisoners would need to follow the rules. Bentham also thought that Reveley's prison design could be used for factories, asylums, hospitals, and schools.

Bentham remained bitter throughout his later life about the rejection of the panopticon scheme, convinced that it had been thwarted by the king and an aristocratic elite. It was largely because of his sense of injustice and frustration that he developed his ideas of sinister interest – that is, of the vested interests of the powerful conspiring against a wider public interest – which underpinned many of his broader arguments for reform.

The Building circular – an iron cage, glazed – a glass lantern about the size of Ranelagh – The Prisoners in their Cells, occupying the Circumference – The Officers, the Centre. By Blinds, and other contrivances, the Inspectors concealed from the observation of the Prisoners: hence the sentiment of a sort of invisible omnipresence. – The whole circuit reviewable with little, or, if necessary, without any, change of place.

— Jeremy Bentham (1791). Panopticon, or The Inspection House