A possible reopening of US military contacts with neighbouring Myanmar for the first time since the 1980s are also expected to feature in Panetta's talks in Bangkok.
The Pentagon chief's trip has been overshadowed throughout by a snowballing sex scandal in Washington that forced the resignation last week of ex-general and CIA director David Petraeus over an extramarital affair.
The US commander in Afghanistan, General John Allen, has been linked to a key figure in the case and is now under investigation for potentially inappropriate emails.
Panetta's visit to Bangkok marks the first face-to-face talks between US and Thai defence ministers since 2008, and comes days before President Barack Obama is due in the region for a tour of Thailand, Cambodia and Myanmar.
Thai-US military relations have deep roots, dating back to the Korean war, but American officials said the Pentagon wanted to restore a more strategic dialogue to complement lower-level contacts between military units.
"We enjoy great operational cooperation with the Thais and what we're trying to do is to do bring back the strategic piece," said a senior defence official, who spoke on condition of anonymity.
The United States suspended military aid to Thailand after a 2006 coup but reinstated the assistance after elections in December 2007.
However, Thailand's domestic turbulence has diminished Bangkok's importance for Washington, which is building up partnerships in Southeast Asia. The "rebalance" to the Pacific is fuelled by American worries over China's growing military might and its tough stance on territorial disputes.
Thailand's airbases and ports remain vital to the US military's logistical network in Asia and the Pentagon continues to hold dozens of drills every year with Bangkok, including the elaborate annual Cobra Gold exercise that involved nearly 13,000 troops from 24 countries last year.
Apart from affirming US-Thai security ties, the two governments are expected to discuss tentative steps to reopen US military contacts with neighbouring Myanmar, officials said.
Washington restored diplomatic relations with Myanmar and ended sanctions on investment in July.
The United States has also dropped its objection to inviting Myanmar to observe the Cobra Gold regional exercise next year, in a sign of thawing relations between the former foes.
Myanmar's participation in Cobra Gold would likely focus on humanitarian relief and disaster assistance, US officials said.
Next week Obama will make the first ever visit to Myanmar by a sitting US president, following a series of dramatic political changes in the country formerly known as Burma, which is emerging from decades of military rule.
He will meet President Thein Sein and opposition leader Aung San Suu Kyi.
Secretary of State Hillary Clinton said Wednesday that bloody unrest in the western state of Rakhine between Buddhists and Rohingya Muslims would "of course" feature in Obama's talks.
Earlier during his week-long trip to Asia, the third since June, Panetta took part in annual strategic talks with Australia in Perth, where officials unveiled plans to station a powerful US Air Force radar and space telescope.
He will fly to Cambodia on Friday to join a meeting of defence ministers from the Association of Southeast Asian Nations that is expected to focus on territorial tensions with China and the Myanmar unrest.