The team will also face Egypt and Uruguay
World Cup: Saudi Arabia to play opening game against Russia
Saudi Arabia will be the first Asian team to have the honour of playing in the World Cup's opening match when they take on hosts Russia in Moscow's Luzhniki Stadium on June 14.
The Gulf team will be facing the hosts, Russia, as well as Egypt and Uruguay.
Group H looks the most open with little on paper between Poland, Colombia, Senegal and Japan.
The usual search for a "Group of Death" looks to be a fruitless one as, partly down to the new rankings-based format none of the "bigger" teams face more than one tough-looking rival.
Defending champions Germany probably have the most difficult of the top seeds as they face awkward games against Mexico and Sweden, with South Korea the outsiders in Group F.
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"From a sports perspective this is a very interesting group of opponents," said coach Joachim Loew. "What we want to do in the group stage is set a foundation for the successful title defence."
"We know Mexico from this year's Confederations Cup, Sweden we know from Europe. South Korea is a bit more unknown for us but I look forward to this group. At such a draw everything is possible. Whatever the group, we have to advance. I was generally relaxed. There is no reason for us to be nervous."
German FA (DFB) President Reinhard Grindel added: "A very interesting group and a challenging task for our team. Preparation for Joachim Loew's team ahead of our first three group opponents starts now."
On paper England look favourites from Group G. They have not lost to Belgium in their last 11 games – their only defeat in their 23 meetings came in 1936.
They drew with Tunisia in a 1990 friendly and beat them in the 1998 World Cup, while they have never met Panama.
Manager Gareth Southgate, however, was not taking anything for granted. "We've had a habit of writing teams off then losing to them," he said.
Belgium boss Roberto Martinez, who spent more than 20 years in the British game, said: "It's a very special draw, though it's probably the most demanding group in terms of travelling."
Belgium play their three group games in Sochi, Moscow and Kaliningrad and will travel 2890km in the process.
Croatia, debutants Iceland, and Nigeria will all fancy their chances of joining favourites Argentina in the knockout phase from Group D. It is the fifth time Nigeria have been grouped with Argentina in their six World Cups.
Group E has a similar look with Brazil hot favourites but little to choose between Switzerland and Costa Rica, who both qualified via the playoffs, and Serbia.
England will break new ground when they face Panama for the first time and with Belgium and Tunisia also in Group G, they will expect to advance.
Group A Russia, Uruguay, Egypt and Saudi Arabia
Group B Portugal, Spain, Iran and Morocco.
Group C France, Peru and Denmark and Australia
Group D Argentina, Croatia, Iceland, and Nigeria.
Group E Brazil, Switzerland, Costa Rica, Serbia
Group F Germany, Mexico, Sweden and South Korea.
Group G Belgium, England, Tunisia and Panama.
Group H Poland, Colombia, Senegal and Japan.
The first match of the tournament on June 14 will be Russia v Saudi Arabia.