Background: In the first few months of 2020, information and news reports about the coronavirus disease (COVID-19) were rapidly published and shared on social media and social networking sites. While the field of infodemiology has studied information patterns on the Web and in social media for at least 18 years, the COVID-19 pandemic has been referred to as the first social media infodemic. However, there is limited evidence about whether and how the social media infodemic has spread panic and affected (...) the mental health of social media users. Objective: The aim of this study is to determine how social media affects self-reported mental health and the spread of panic about COVID-19 in the Kurdistan Region of Iraq. Methods: To carry out this study, an online questionnaire was prepared and conducted in Iraqi Kurdistan, and a total of 516 social media users were sampled. This study deployed a content analysis method for data analysis. Correspondingly, data were analyzed using SPSS software. Results: Participants reported that social media has a significant impact on spreading fear and panic related to the COVID-19 outbreak in Iraqi Kurdistan, with a potential negative influence on people’s mental health and psychological well-being. Facebook was the most used social media network for spreading panic about the COVID-19 outbreak in Iraq. We found a significant positive statistical correlation between self-reported social media use and the spread of panic related to COVID-19 (R=.8701). Our results showed that the majority of youths aged 18-35 years are facing psychological anxiety. Conclusions: During lockdown, people are using social media platforms to gain information about COVID-19. The nature of the impact of social media panic among people varies depending on an individual's gender, age, and level of education. Social media has played a key role in spreading anxiety about the COVID-19 outbreak in Iraqi Kurdistan. (shrink)