Panoramic annular lens (PAL) which integrates refraction lens and reflection mirror, can capture the super-view field of the entire 360° around the optical axis instantly. It is widely used in robot navigation, video surveillance and virtual reality. The imaging principle of PAL is to project the view field around the optical axis onto an annular plane through twice reflection. There is serious distortion in the tangential and radial directions on the image. A spherical perspective projection model is proposed to correct the image distortion according to the imaging feature of PAL. Firstly, the PAL correction model which includes distortion parameters is constructed. The points on the spatial line are projected to the points on the sphere under this model. All spherical points are fitted to the best great circle by genetic algorithm. The distortion parameters are obtained during this procedure. Then the panoramic image is corrected. Simulation and real-image experiments demonstrate that the tangential and radial distortions are corrected greatly.