Red Canyon sits right on US-89 between Panguitch and the Bryce Canyon turnoff, and most visitors drive straight through it on the way to the national park without stopping. That is a mistake. The canyon is studded with the same brilliant red and orange hoodoos as Bryce, costs nothing to enter, and is considerably less crowded.
The Dixie National Forest manages the area. Two short tunnels on US-89 frame the red rock walls as you pass through — a dramatic introduction. There are about 15 miles of trail in total, ranging from the easy Birdseye Trail (a flat, paved path suitable for bikes and wheelchairs) to the more demanding Pink Ledges Trail, which winds up through the formations for broader views. The Thunder Mountain Trail links Red Canyon to Coyote Hollow and runs about 5 miles one-way for those wanting a longer day.
The visitor center on US-89 has maps and the staff are helpful about trail conditions. Red Canyon is roughly 10 miles from Panguitch and easily combined with a Bryce Canyon day — stop here on the way out for the views, or on the way back when you have more time and fewer people around.